Answer
Accounting Profit: (Total revenue - Explicit Costs)
Economic Profit: (Accounting Profit - Implicit Costs)
Normal Profit: Average accounting profit for someone in your field
Economic profit determines how entrepreneurs allocate resources because they will always pick the option which nets them the most money.
Work Step by Step
Explicit costs are the sum of all the business expenses.
Implicit costs are opportunity costs of money, such as interest on savings and normal profit.
