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You are here: Home / Potpourri / Economics 101: Accounting Profit

Economics 101: Accounting Profit

Economics 101: Accounting Profit

[This is part of the series: The Complete Guide To Economics 101.]

What is accounting profit?

Accounting Profit is profit that accounts for only explicit costs.

In this way, accounting profit ignores implicit costs.

Said different, accounting profit ignores opportunity costs.

Formally, this looks like:

Profit = Total Revenue – Total Cost

Where:

Total Cost = Explicit costs only

Economic profit, however, accounts for both explicit and implicit costs.

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Filed Under: PotpourriTagged With: #Economics101

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