What is the primary difference between accounting profits and economic profits?

Business

1 answer:

sergejj [24]3 years ago

6 0

Answer: Accounting profits ignore implicit costs; economic profits consider them.

Explanation: In simple words, implicit cost refers to the cost of choosing the best alternative and loosing the profit that one could have earned by choosing the second best alternative.

Accounting profit is the revenue that one has left with after compensating for explicit cost but economic cost also takes into consideration the implicit one.

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Let Plug in the formula

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