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







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