Question

What would it look like if we took the economic costs idea and applied it to revenue?

Answer 1

Economic costs are the combination of both accounting and implicit costs . It means that economic costs shows us the costs that we pay from our pockets and also the opportunity costs , the benefit from the next best alternative that is forgone .

Same idea can be applied to revenue . The revenue that appears on out account is the total earnings from the units sold at a certain price . But we can also take into account the revenue that is forgone from the next best alternative . Here is a problem since this revenue or salary or income from next best alternative is actually considered as implicit cost and included is economic cost accounting . So total revenue is used to calculate economic profits where the revenue from present activity is considered .