If there are implicit costs of production ?
Correct answer: A. accounting profit will exceed economic profit
- A. accounting profit will exceed economic profit
- B. economic profit will always be zero
- C. economic profit will exceed accounting profit
- D. accounting profit will always be zero
- E. economic profit and accounting profit will be equal
Explanation
Accounting profit subtracts only explicit monetary costs, whereas economic profit also subtracts implicit opportunity costs. Therefore, when implicit costs exist, accounting profit exceeds economic profit.
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