- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 2. Economic Profit vs. Accounting Profit
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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