# Answer to Question #27392 in Economics of Enterprise for fanura

Question #27392
Your firm has total sales revenue of $1,000,000 and total explicit costs of$600,000 and total implicit cost of $300,000. What will be the accounting profit for the firm? What will be the economic profit for the firm? Explain the difference using the data. 1 Expert's answer 2013-04-16T11:39:11-0400 Implicit costs (or opportunity costs) represent the divergence between economic profit (total revenues minus total costs, where total costs are the sum of implicit and explicit costs) and accounting profit (total revenues minus only explicit costs). Since economic profit includes these extra opportunity costs, it will always be less than or equal to accounting profit. So, accounting profit = Total revenue - explicit cost =$1,000,000 - $600,000 =$400,000
Economic profit =& Total revenue - explicit cost - implicit cost = $1,000,000 -$600,000 - $300,000 =$100,000

As we can conclude, the accounting profit of firm is higher than the economic profit, as it doesn&#039;t include the opportunity costs.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Assignment Expert
10.04.14, 15:27