Question

Accounting profit is equal to a. total revenue minus the opportunity cost of producing goods and services. b. average revenue minus the average cost of producing the last unit of a good or service. c. total revenue minus the explicit cost of producing goods and services. d. marginal revenue minus marginal cost.

Answer 1

Answer:Option C

Explanation:

Accounting profit means the book keeping profit where the explicit cost is taken and subtracted from the revenue of the firm. This rule is followed according to the GAAP rule of accounting. The explicit cost of production includes the production cost, raw material costs, distribution costs, and other production expenses.

Explicit cost are the direct cost incurred in the production of goods and services. Hence these cost are deducted from revenue. Implicit cost are hidden cost which are not paid directly.