7 1 Explicit and Implicit Costs, and Accounting and Economic Profit Principles of Economics 3e
Explicit costs are accounted for when calculating accounting profit, which is important for financial reporting and tax obligations. However, to gain a true picture of a business’s profitability, one must also consider implicit costs, which are factored into economic profit. By analyzing both, businesses can make more informed decisions about resource allocation, investments, and potential […]