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Economic profits are not costs of production since the entrepreneur does not require the gaining of an economic profit to keep the firm operating. In economics, costs are whatever is required to keep a firm operating.
Wiki User
∙ 13y ago
Wiki User
∙ 10y agoProfit is the difference between sales and cost as per formula;
Profit = Sales - Cost
So profit can never be considered as cost or revenue.
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Why accounting profit is higher than economic profit?
First of all, we need to understand what is explicit cost and implicit cost. Explicit cost mean real expenses, while implicit cost mean opportunity cost. In accounting profit, we only minus explicit cost, while in economic profit we minus explicit cost and implicit cost. therefore accounting profit is higher than economic profit.
Differentiate between normal profit and economic profit?
Economic profit is when revenue exceeds total cost of inputs. Normal profit, on the other hand, is net profit less costs.
When can monopolist earn an economic profit?
A monopolist earns economic profit when the price charged is greater than their average total cost. To maximize profits, monopolies will produce at the output where marginal cost is equal to marginal revenue. To determine the price they will set, they choose the price on the demand curve that corresponds to this level of production.
If all firms only earn a normal profit in the long run firms will develop new products or lower-cost production methods because they can?
Innovate and possibly earn an economic profit in the short run.
Under which economic system are resources devoted to production for use or need rather than production for profit?
socialism
Why accounting profit is higher than economic profit?
First of all, we need to understand what is explicit cost and implicit cost. Explicit cost mean real expenses, while implicit cost mean opportunity cost. In accounting profit, we only minus explicit cost, while in economic profit we minus explicit cost and implicit cost. therefore accounting profit is higher than economic profit.
What is the cost of poor production?
Less profit No Cost
How does the cost of production and the selling price affect the profit?
As a very rough approximation,Profit = Selling Price - Cost of Production.As a very rough approximation,Profit = Selling Price - Cost of Production.As a very rough approximation,Profit = Selling Price - Cost of Production.As a very rough approximation,Profit = Selling Price - Cost of Production.
Differentiate between normal profit and economic profit?
Economic profit is when revenue exceeds total cost of inputs. Normal profit, on the other hand, is net profit less costs.
When can monopolist earn an economic profit?
A monopolist earns economic profit when the price charged is greater than their average total cost. To maximize profits, monopolies will produce at the output where marginal cost is equal to marginal revenue. To determine the price they will set, they choose the price on the demand curve that corresponds to this level of production.
If all firms only earn a normal profit in the long run firms will develop new products or lower-cost production methods because they can?
Innovate and possibly earn an economic profit in the short run.
Under which economic system are resources devoted to production for use or need rather than production for profit?
socialism
What is the Difference between Normal profit and Economic Profit?
In economics, normal profit is often called the break-even point. It is the level of profit where all of the costs of your business, including the salary of the CEO, are covered. When a firm has normal profit but not economic profit, the total revenue of the firm equals the total cost of the firm. However, if a firm has economic profit, total revenue is higher than total cost.
Evaluate Google Inc. Which theories of profit accounts for Googles economic profit How does opportunity cost relate to economic profit?
What therories are used in google Inc. for employee statisfactions and gains
Difference between accounting profit and economist's profit?
The accounting profit is the difference between total revenue and total cost excluding the economic cost (opportunity cost) of owner-supplied resources such as time and capital. At the other hand, In the economic cost, we include the opportunity cost in our calculations. · When total revenue exceeds both explicit and implicit costs, the firm earns economic profit. · Economic profit is smaller than accounting profit Another answer culed be: Economic Profit is slightly different than accounting profit, which merely the firm's total revenues minus its total costs. Economic profit is defined as total revenues minus total operating costs minus opportunity cost. Opportunity cost is defined as the cost of the profits you forgo by not doing another activity. For example the opportunity costs of opening a lemonade stand is equal to the difference between the accounting profits of the lemonade stand minus the accounting profits of a more profitable hot dog stand.
When a firms revenue from sales exceeds its cost of production it will earn?
Profit
What are the objective of operating cost?
To seperate the cost of production from profit to allow analysis like ROI (Return on Investment), cost vs benefit, and cost reducing production improvements.
