Question

What costs and revenues do economists include when calculating profit that accountants don’t include? In addition to the implicit costs and revenues used by accountants, economists include all explicit costs and revenues when calculating profit. This means that they include labor costs and changes in the value of any assets owned by the firm. In addition to the explicit costs and revenues used by accountants, economists include all implicit costs and revenues when calculating profit. This means that they include opportunity costs and changes in the value of any assets owned by the firm. In addition to the explicit costs and revenues used by accountants, economists include all implicit costs and revenues when calculating profit. This means that they include labor costs and expected changes in sales. Economists and accountants calculate profit with the same costs and revenues. The only difference is that economists work with predicted costs and revenues for the future, whereas accountants work with costs and revenues from previous years.

Answer 1

Answer:

In addition to the explicit costs and revenues used by accountants, economists include all implicit costs and revenues when calculating profit. This means that they include opportunity costs and changes in the value of any assets owned by the firm.

Explanation:

accounting profit = total revenues - total explicit costs

• explicit costs include all the actual measurable expenses like manufacturing costs, selling costs, etc.

economic profit = accounting profit - opportunity (implicit) costs

• opportunity or implicit costs are extra costs incurred or benefits lost from choosing one activity or investment instead of another one