Think about accounting profits. You should know that accounting profits are different to an account versus an economist. To an economist, Economic Profit = Total Revenue − ______________.
Explanation
Answer - C - To an economist, Economic Profit = Total Revenue - (Explicit Costs + Implicit Costs).
Key Takeaway: A business is always trying to make a profit, but accountants and economists calculate that profit differently. According to an accountant, a business’s costs are limited because of what the business must first pay out. These are referred to as explicit costs. To an economist, it is also necessary to include opportunity costs like resources and capital. These are called implicit costs. So to an economist, the business’s profit is the total revenue - all of the costs (both explicit and implicit).
