Complete the sentences to illustrate how economists and accountants view profit differently. Economic profit is always zero. typically higher than accounting profit. typically lower than accounting profit.

Economic profit is typically lower than accounting profit.

Explanation:

The term “profit" means gain derived from the sale of a good to many people but to economists and accountants profit is more than just that. Profit is the difference between the cost and revenue, but there is a discrepancy between accounting profit and economic profit. The main difference between accounting and while accounting profit reflects only explicit cost, economic profit reflects explicit and implicit costs.

Accounting profit = total revenue- total costs(explicit cost)

Economic profit = total revenue - (explicit costs + implicit costs).

Explicit costs are the cost associated with production activities for a firm. Examples include payments for rent, wages and salaries, or materials. Implicit costs are the opportunity cost of resources that are already owned by the firm and used in business. Example of an implicit cost is the expanding a factory from a land already owned by the company.

Economic profit is lower than accounting profit since it includes opportunity cost associated with the production of goods and services.

typically a loft will include modern kitchen and bathrooms, this increases the price tag. lofts also have a good amount of open space, this requires more heating and electricity. lofts are also in older buildings, this means that maintaining the location increases the bill. keep in mind this is without talking about the high state and property taxes.

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