Which of the following is true?
A) Profit as calculated by accountants and economic profit are not necessarily equal.
B) Profit as calculated by accountants is always smaller than economic profit.
C) Economic profit ignores implicit costs.
D) The Internal Revenue Service taxes the firm's economic profit but not its normal profit.
E) The Internal Revenue Service taxes the firm's normal profit but not its economic profit.

Question

Quizplus · Accepted Answer

Profit as calculated by accountants only takes into account explicit costs, while economic profit takes into account both explicit and implicit costs. Therefore, there can be a difference between the two.

Which of the Following Is True