ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Total Revenue-Explicit Costs
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Total Revenue + Explicit Costs
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Total Revenue-(Explicit Costs + Implicit costs)
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Total Revenue-(Explicit Costs-Implicit costs)
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Detailed explanation-1: -Economic profit is total revenues minus total costs-explicit plus implicit costs.
Detailed explanation-2: -Economic profit (or loss) can be calculated as revenue minus explicit costs minus opportunity cost.
Detailed explanation-3: -Answer and Explanation: Option a) accounting profit = economic profit + implicit costs is correct.
Detailed explanation-4: -Implicit costs represent the loss of income but do not represent a loss of profit. These costs are in contrast to explicit costs, which represent money exchanged or the use of tangible resources by a company.
Detailed explanation-5: -To calculate the economic cost, subtract the projected implicit costs from the pre-determined accounting cost. With this calculation, you may determine if an alternative business option could save the company money. This may help you decide whether to pursue an alternative business venture.