Principles of Microeconomics / Unit 6 MIC 0504 short lesson, about 20 seconds
Accounting Profit and Economic Profit
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The idea
Accounting profit is revenue minus explicit costs. Economic profit is revenue minus explicit and implicit costs together, and it is the number that decides whether the venture beats the owner's alternatives.
In practice
A firm can show an accounting profit and an economic loss at once.
Where people slip
Every profit in the rest of this course is economic profit unless the entry says otherwise.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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