The Difference Between Zero Accounting Profit and Zero Economic Profit

question 36

Multiple Choice

The difference between zero accounting profit and zero economic profit is that

• A)an economic profit of zero indicates a fair rate of return because it includes opportunity cost.opportunity cost and 
• B)an economic profit of zero indicates an unacceptable rate of return because it does not include opportunity cost.
• C)an economic profit of zero indicates more than a fair rate of return because it includes opportunity cost and explicit cost..
• D)an accounting profit of zero indicates a fair rate of return because it includes opportunity cost.

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Definitions:

Federal Income Taxes

Taxes imposed by the government on the annual income of individuals, corporations, trusts, and other legal entities.

State Income Taxes

Taxes levied by individual states on the income of individuals and businesses within their jurisdiction.

Payroll Taxes

Taxes that are withheld from employees' wages or paid by employers on behalf of their employees, typically including social security and medicare taxes.

Subcontractors

Individuals or companies hired by a primary contractor to perform specific tasks as part of a larger project.