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What is the difference between accounting profit and economic profit?
Accounting Profit:
The accounting profit of a business is the revenue of business minus the explicit costs and depreciation.
Economic Profit:
The economic profit of a business is the revenue of business minus the opportunity cost of its resources. This is frequently less than the accounting profit.
Gasoline, insurance, depreciation, and repairs are all costs of owning a car. Which of these can be considered opportunity costs in the context of each of the following decisions?
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