MYTUTOR SUBJECT ANSWERS

249 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...

6 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

58 SUBJECT SPECIALISTS

£22 /hr

Noah C.

Degree: PPE (Bachelors) - Oxford, Magdalen College University

Subjects offered:Economics, Politics+ 4 more

Economics
Politics
Philosophy
Maths
Further Mathematics
.TSA. Oxford.

“Hi, I'm Noah. I'm currrently studying Politics, Philosophy and Economics (PPE) at Oxford university. I have always enjoyed teaching others and helping them learn, and my first experience with tutoring was several years of teaching str...”

£20 /hr

Chris B.

Degree: Economics (Bachelors) - Durham University

Subjects offered:Economics, Maths+ 2 more

Economics
Maths
Further Mathematics
-Personal Statements-

“About me: I am currently in my first year of studying Economics at Durham University. I have been tutoring maths for about two years now, so have had plenty of experience passing on my knowledge and interest in my subjects to younger ...”

£20 /hr

Viktoriya L.

Degree: accounting and finance (Bachelors) - LSE University

Subjects offered:Economics, Russian+ 5 more

Economics
Russian
Maths
Mandarin
History
Accounting
-Personal Statements-

“Hello, My name is Viktoriya. I am a first year student at the London school of Economics and Poliical science studying accounting and finance. I am passionate about maths and finance in particular and wish to convey this passion to yo...”

About the author

Jonathan A.

Currently unavailable: for new students

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 can I show the impact of a NMW on employment using a supply and demand graph?

Comment on whether higher government spending will always increase inflation (6)

How do I provide a good evaluation point for something I agree with?

What is the difference between macro and micro economics?

View A Level Economics tutors

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

mtw:mercury1:status:ok