Accounting profit is typically rev: 06_26_2018 Multiple Choice smaller than economic profit because the former does not take implicit costs into account. greater than economic profit because the former does not take explicit costs into account. greater than economic profit because the former does not take implicit costs into account. equal to economic profit because explicit costs include all opportunity costs.

greater than economic profit because the former does not take implicit costs into account.

Explanation:

Accounting profit= total revenue - explicit cost

Total revenue =price x quantity sold  

Explicit cost includes the amount expended in running the business. They include rent , salary and cost of raw materials

an example

revenue = 100

explicit cost = 50

implict cost = 20

accounting profit = 100 - 50 = 50

economic profit = 50 - 20 = 30

economic profit is less than accounting profit

Economic profit = accounting profit - implicit cost

Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives

answer; capital structure decision;

answernet income for 2017 will be greater if the inventory quantity declines;