Difference between accounting profit and economic profit, Microeconomics

Difference between accounting profit and economic profit:

The difference between accounting profit and economic profit is that economists include in total cost of production both implicit and explicit costs whilst accountants see cost of production as only the explicit costs. Accounting profit is total revenue less total cost (made up of only explicit costs). The result if positive then an accounting profit is earned. If negative then an accounting loss is made and if zero then it is referred to as breakeven. Economic profit, on the other hand, is total revenue less total cost (made up of explicit plus implicit costs). The result if positive then an economic, pure or supernormal profit has been earned, if negative then an economic loss is made and if zero then normal profit has been earned.

Posted Date: 1/2/2013 11:49:39 PM | Location : United States







Related Discussions:- Difference between accounting profit and economic profit, Assignment Help, Ask Question on Difference between accounting profit and economic profit, Get Answer, Expert's Help, Difference between accounting profit and economic profit Discussions

Write discussion on Difference between accounting profit and economic profit
Your posts are moderated
Related Questions
Sources of Divergence The principal cause of extraordinary variation in output per worker between countries today are differences in their corresponding steady-state capital-ou

An economy can produce a maximum of either 28 million tons of wheat or 7,000 automobiles, or various intermediate quantities, as depicted in the table below:

What are the advantages of leaving the allocation of a countrys resources to the price mechanism? Ans) The main conditions needed are: 1. Either a finite number of agents or pr


ELEMENTARY THEORY OF PRICE FORMATION: DEMAND-SUPPLY ANALYSIS: We discuss the elementary theory of price formation. Demand curve in the market is derived from the aggregate con

different types of production funtion and curve given by different economist

Question: Third degree price discrimination Suppose that a monopolist faces two markets with demand curves given by D(p 1 ) = 100 - p 1 D(p 2 ) = 100 - 2p 2 Assume that

Hi, I am taking an economics course. I have a problem where I am given 2 types of units with the same production rate and the labor used to produce those units. I am supposed to c

u=2x^2+3y^2 hence income=310 birr and price=3 birr calculate quntity of x and y the optimize&minmize utilityfor the given income

Allocated Stock and Safety Stock  Allocated stock  A category of stock which ensures that current stock is set aside and not issued under the normal procedure.  Safet