alleryStart learning →Total revenue minus total cost, counting both explicit and implicit costs, is:
AGross revenue
BMarginal revenue
CEconomic profit
DAccounting profit
Answer & Solution
Correct answer: C. Economic profit
1. The two profit measures differ in which costs they subtract.
2. Economic profit is total revenue minus total cost, including both explicit and implicit costs.
3. Accounting profit subtracts only the explicit costs.
4. Economic profit is therefore always the smaller of the two.
_Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 7 'Production, Costs and Industry Structure', sections 7.1-7.4_
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