ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -You can calculate accounting profit by subtracting explicit costs or expenses from the total amount of revenue earned. Explicit costs include things like raw materials, wages, lease payments, and utilities.

Detailed explanation-2: -Accounting profit is the total revenues minus explicit costs, including depreciation. Economic profit is total revenues minus total costs-explicit plus implicit costs. Explicit costs are out-of-pocket costs for a firm-for example, payments for wages and salaries, rent, or materials.

Detailed explanation-3: -Profit is the firm’s total revenue minus its total cost. A firm’s cost of production includes all the opportunity costs of making its output of goods and services. A firm’s cost of production include explicit costs and implicit costs. Explicit costs involve a direct money outlay for factors of production.

Detailed explanation-4: -Economic profit (or loss) can be calculated as revenue minus explicit costs minus opportunity cost. Explicit costs are all costs typically accounted for, such as labor expenses, materials costs, marketing, depreciation, and taxes.

Detailed explanation-5: -Economic profit can be derived from calculating total revenues minus all of the firm’s costs, including its opportunity costs. are two stark realities any business firm must recognize.