ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Economic profits are calculated by subtracting only explicit costs from total revenue.
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Accounting profits are calculated by subtracting only implicit costs from total revenue.
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Economic profits exceed accounting profits.
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Accounting profits are equal to economic profits plus implicit costs.
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Economic profits are equal to accounting profits plus explicit costs.
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Detailed explanation-1: -The correct answer to the given question is option c. Economic profit = total revenue-implicit costs-explicit costs.
Detailed explanation-2: -Which of the following is TRUE regarding accounting and economic profits? Economic profits are calculated by subtracting only explicit costs from total revenue.
Detailed explanation-3: -Which of the following statements regarding accounting profits, opportunity costs, and economic profits is true? If accounting profits are less than opportunity costs, there will be economic losses.
Detailed explanation-4: -Economic profit represents a company’s revenue less its explicit costs as well as its opportunity costs. It’s used for internal analysis. Accounting profit (net income) is a company’s revenue less its direct, indirect, and capital costs.
Detailed explanation-5: -Accounting profit is the total revenues minus explicit costs, including depreciation. Economic profit is total revenues minus total costs-explicit plus implicit costs.