- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics (1)
- Reading 12. Topics in Demand and Supply Analysis
- Subject 5. Economic Cost vs. Accounting Cost
CFA Practice Question
Economic profit is ______.
A. total revenue minus explicit costs
B. total revenue minus the total of explicit and implicit costs
C. total revenue minus implicit costs
Explanation: Economic profit is total revenue minus the sum of explicit and implicit costs. Thus, when economic profit is zero, firms still receive a profit to cover their implicit costs.
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