Question

"Accounting profits" differ from "economic profits" in that accounting profits:

		A.  Ignore the explicit costs of production while economic profits include them.
		B.  Include all the costs of production while economic profits do not.
		C.  Include the opportunity costs of firm-owned resources while economic profits ignore them.
		D.  Ignore the opportunity costs of firm-owned resources while economic profits include them.
		E.  Include the explicit costs of production while economic profits ignore them.

Answer 1

Solution:-option D is correct.

D.  Ignore the opportunity costs of firm-owned resources while economic profits include them.

Expalaination:-Accounting profit  Ignore the opportunity costs of firm-owned resources while economic profits include them economic profit is the difference between total monetary revenue and total costs, but total costs include both explicit and implicit costs. Economic profit includes the opportunity costsassociated with production and is therefore lower thanaccounting profit.