please answer this quickly I need it ASAP! The difference between zero accountin
ID: 1160627 • Letter: P
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please answer this quickly I need it ASAP!
The difference between zero accounting profit and zero economic profit is that economists include opportunity cost in zero economic profit, while accountants do not include opportunity cost in zero accounting profit. Oeconomists include opportunity cost in zero accounting profit, while accountants do not include opportunity cost in zero economic profit. economists do not include opportunity cost in zero accounting profit, while accountants do include opportunity cost in zero economic profit. O economists do not include opportunity cost in zero economic profit, while accountants do include opportunity cost in zero accounting proft.Explanation / Answer
The difference between zero accounting profit and zero economic profit is that-
Economics include opportunity cost in zero economic profit, while accountants do not include opportunity cost in zero economic profit.
It is so because
Economic profit = Total revenue - Economic cost,
Where economic cost = implicit cost + explicit cost
Implicit cost is the opportunity cost. For example, if the person is using his own land for production, then while calculating economic cost we will include the opportunity cost of this land (i.e., the rent that this land can earn, which the producer is sacrificing to use this land in the process of production)
Explicit cost is the outflow of cash.
It means at zero economic cost total revenues = explicit cost + implicit cost.
While accounting profit = total revenues - explicit cost
It means at zero accounting profit, total revenue = explicit cost.
So in accountants do not consider the opportunity cost as the cost.
It means at zero economic profit include the opportunity cost in zero economic profit while accountants do not include the opportunity cost in zero accounting profit.
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