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What Is the Difference Between Accounting Profit and Economic Profit

question 191

Essay

What is the difference between accounting profit and economic profit?


Definitions:

Marginal Cost

The additional cost incurred from the production of one more unit of a product or service.

Total Cost

The complete cost of production that includes both fixed and variable costs.

Opportunity Cost

The best alternative that we forgo, or give up, when we make a choice or a decision.

ΔTVC/Δq

ΔTVC/Δq represents the change in Total Variable Cost (TVC) resulting from producing one additional unit of output, equivalent to Marginal Cost.

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