Question

The divergence between accounting profit and economic profit is likely to be: Group of answer choices Greater for highly leveraged firms than for equity-financed firms Greater for labor-intensive firms than for capital-intensive firms Greater for capital-intensive firms than for labor-intensive firms Greater for technology-based firms than firms in mature industries

Answer 1

The correct answer to the following question will be Option C (For capital-intensive firms bigger than those for labor-intensive firms).

Step-by-step explanation:

• The main distinction between accounting income and economic benefit is that income statement applies to gains reported in accounting records which have been measured by subtracting from either the earnings all of the actual expenses accrued relating to marginal costs.
• Economic benefit revenue measured taking into account all overt and indirect costs where even the tacit cost corresponds to the potential expense of the agency's capital.

The other choices have no relation with the specified scenario. And the answer to the above seems to be the right one.