In what way does an economist's measurement of profit differ from an accountant's?
A) Accountants calculate total revenue differently than do economists.
B) Accountants do not always include all of the opportunity costs when calculating total production costs.
C) Economists calculate higher profits for firms as economic profit generally exceeds accounting profit.
D) Economists do not always include all of the opportunity costs when calculating total production costs.

Question

Quizplus · Accepted Answer

Accountants typically focus on explicit costs (out-of-pocket expenses) when calculating profit, whereas economists also include implicit costs, such as opportunity costs, to determine economic profit. This broader view can lead to differences in profit calculations between the two professions.

In What Way Does an Economist's Measurement of Profit Differ