52: Defining Profit Flashcards
1
Q
profit
A
total revenue - total cost
2
Q
explicit cost
A
cost that requires outlay of money
3
Q
implicit cost
A
dollar value of forgone benefits
4
Q
depreciation
A
reduction in value of equipment due to wear and tear
5
Q
accounting profit
A
revenue - explicit cost - depreciation
6
Q
economic profit
A
revenue - opportunity cost (implicit and explicit)
7
Q
implicit cost of capital
A
opportunity cost of owning capital, the income that could have been made if it was used for its next best use
8
Q
normal profit
A
economic profit of zero
–> would not be better or worse doing something else
