Can Accounting Profit Be Positive While Economic Profits Are Negative

question 157

Multiple Choice

Can accounting profit be positive while economic profits are negative?

• A) No. The two concepts are identical.
• B) Yes, if total revenue covers opportunity costs but not explicit costs.
• C) Yes, if total revenue covers explicit costs but not opportunity costs.
• D) No. Economic profits must always be larger than accounting profits.

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Definitions:

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A psychological phenomenon in which an individual experiences dissonance or conflict by observing another person engage in behavior that contradicts their beliefs or values.

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