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Feb 23 2014 06:45pm
Discuss the differences between accounting profit and economic profit. As I have never understood economics really well, I would request some help. I have Googled it, and Wikipedia'd it, and I just still don't understand, could someone break it down Barney style for me? Reward would be the remaining 3fg on my account, I know it's not much, but it is all that I have and would be really appreciated. (Sorry for the sob story)
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Feb 23 2014 11:25pm
Accounting profit is what you typical would think of when talking about "profit". To find this, you subtract the costs of rent, produce, labor and whatever else from your total revenue.

Rent/Produce: $45,000
Revenue: $60,000
Accounting Profit: $15,000

Economic profit is fancier and takes into account more things - opportunity costs.

Revenue $60k
Explicit opportunity costs ( Rent/Produce ) : $45k
Implicit opportunity costs:
You could have gotten a job making $10/ hr and made 20k that year instead of doing a fruit stand.
You could have put 45k in the bank and made 2k in interest...

60k - ( 45k + 20k + 2k) = -7k so you lost money
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