Which of the following statements is correct?
A)Assuming that explicit costs are positive, economic profit is greater than accounting profit.
B)Assuming that implicit costs are positive, accounting profit is greater than economic profit.
C)Assuming that explicit costs are positive, accounting profit is equal to economic profit.
D)Assuming that implicit costs are positive, economic profit is positive.

Question

Quizplus · Accepted Answer

Accounting profit considers only explicit costs, while economic profit takes into account both explicit and implicit costs. Therefore, if implicit costs are positive, accounting profit, which does not deduct implicit costs, will be greater than economic profit, which does.

Which of the Following Statements Is Correct