💰Explicit costs are easily identifiable dollar amounts, while implicit costs include costs that have been given up and are not easily assigned a monetary value.
🧾Accounting profit is calculated as total revenue minus total explicit costs, and is used to compare the financial performance of companies.
💡Economic profit is calculated as total revenue minus total explicit and implicit costs, and is a more accurate measure of a company's overall worth.
📊Economic profit is typically smaller than accounting profit because it includes expenses that are not necessarily directly connected to making a product or providing a service.
🔍The goal of companies is to maximize economic profit, which takes into account both explicit and implicit costs.