Economic profit equals total revenue minus: a) the cost of resources bought in the market. b) the...

Question:

Economic profit equals total revenue minus:

a) the cost of resources bought in the market.

b) the implicit rental rate.

c) the cost of resources owned by the firm.

d) the cost of resources supplied by the owner.

e) the opportunity cost of production.

Implicit Cost and Explicit Costs:

The explicit costs of production are those costs that are included in the day-to-day books of accounts. On the other hand, the implicit costs are those costs that involve some opportunity cost and are not included in the books of accounts.

Answer and Explanation: 1

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The correct answer is:

e) The opportunity costs of production.

Reason: The economic profit is inclusive of explicit and implicit costs. Unlike...

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How to Calculate Economic Profit: Definition & Formula

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Chapter 3 / Lesson 11
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Learn what the definition of economic profit is, and understand how to calculate it using an equation.


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