Which of the following statements is most likely true regarding economic and accounting profits?

A) Economic profits are generally less than accounting profits.

B) Economic profits plus accounting profits generally equal zero.

C) Economic profits minus accounting profits generally equal zero.

D) Economic profits are generally greater than explicit costs.

Question

Business

Karson Swanson

15 January, 07:45

Which of the following statements is most likely true regarding economic and accounting profits?

A) Economic profits are generally less than accounting profits.

B) Economic profits plus accounting profits generally equal zero.

C) Economic profits minus accounting profits generally equal zero.

D) Economic profits are generally greater than explicit costs.

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Answers (1)

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Valentina Copeland · Answer 1

The statement that is most likely true regarding economic and accounting profits is:

A) Economic profits are generally less than accounting profits.

Explanation:

Economic profits are the result of revenue minus opportunity costs and sales costs and accounting profits are the result of revenue minus the sales costs.

Because economic profits are calculated by subtracting opportunity costs from the revenue, they can't be bigger than accounting profits.