MYTUTOR SUBJECT ANSWERS

167 views

What is the difference between accounting and economic profit?

Accounting profit is revenues minus explicit costs, which include wages and machine rental among other things. But there are also implicit costs, or opportunity costs. These can arise because the factors of production used by the firm (labour and capital) could potentially be used to make more money when put to another use. For example, say I start a business and take all the accounting profit for myself. If my firm requires 40 hours per week of my labour time, and only makes £40,000 accounting profit, when I could have made £50,000 working 40 hours per week for another firm, the economic profit is actually -£10,000. 

Jonathan A. GCSE Economics tutor, A Level Economics tutor, IB Economi...

4 months ago

Answered by Jonathan, an A Level Economics tutor with MyTutor


Still stuck? Get one-to-one help from a personally interviewed subject specialist

62 SUBJECT SPECIALISTS

£20 /hr

Veleka G.

Degree: Philosophy and Politics (Bachelors) - Durham University

Subjects offered: Economics, History+ 2 more

Economics
History
English Literature
-Personal Statements-

“About Me:My name is Veleka and I'm a first year Philosophy and Politics student at Durham University. I would describe myself as highly energetic and very positive, but I am also very demanding anddedicated to help every student achi...”

£26 /hr

Priya L.

Degree: Economics (Bachelors) - Warwick University

Subjects offered: Economics, Maths+ 1 more

Economics
Maths
Further Mathematics

“About Me: I recently graduated from the University of Warwick with an Economics degree. I am currently on a gap year before I begin my graduate role as a Management Consultant in October. I decided to tutor because I wanted to spend m...”

£20 /hr

Reubin B.

Degree: Business Economics (Bachelors) - Exeter University

Subjects offered: Economics, Maths+ 1 more

Economics
Maths
Graphic Design

“ABOUT ME I am currently a student at the University of Exeter studying Business Economics. I have a keen interest in all aspects of economics with the passion to guide you through your course, and the hope to inspire the same enthusia...”

MyTutor guarantee

About the author

£26 /hr

Jonathan A.

Degree: Economics (Masters) - University College London University

Subjects offered: Economics, Philosophy+ 4 more

Economics
Philosophy
Maths
Government and Politics
.TSA. Oxford.
-Oxbridge Preparation-

“About Me: I am studying for an MSc in Economics at University College London.  I did my undergraduate degree in Oxford studying Philosophy, Politics and Economics, and as a result amfamiliar with the tutorial system from the student's...”

You may also like...

Posts by Jonathan

What are some advantages and disadvantages of the 'first-past-the-post' electoral system?

What is the difference between accounting and economic profit?

What is the logical problem of evil?

Other A Level Economics questions

How might changes in the interest rate affect aggregate demand?

Explain one economies of scale that a firm may enjoy when it expands its production scale.

What are economies of scale and scope?

Explain the main sources of monopoly power.

View A Level Economics tutors

Cookies:

We use cookies to improve our service. By continuing to use this website, we'll assume that you're OK with this. Dismiss

mtw:mercury1:status:ok