Microeconomics: Principles, Problems, & Policies, 20th Edition

Published by McGraw-Hill Education
ISBN 10: 0077660811
ISBN 13: 978-0-07766-081-9

Chapter 9 - Businesses and the Costs of Production - Discussion Questions - Page 217: 2

Answer

The answer is as below.

Work Step by Step

Accounting profits equal the difference in total sales revenue and explicit costs whereas normal profits equal the profit that could have been earned had the entrepreneur provided his skills to an alternative venture than his current venture. Economic profits equal the difference between total revenues and total economic costs, which is the aim of implicit and explicit cost. Economic profit takes into account the implicit costs which equal the opportunity costs.
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