Economic profit versus Accounting Profit e Economists measure a firms economic profit as total revenue minus all the opportunity costs (explicit and implicit o Accountants measure the accounting profit as the firm's total revenue minus only the firms explicit costs. In other words, they ignore the implicit costs When total revenue exceeds both explicit and implicit costs, the firm earns economic profit Economic profit is smaller than accounting profitEconomic Profit Versus Accounting Profit • Economists measure a firm’s economic profit as total revenue minus all the opportunity costs (explicit and implicit). • Accountants measure the accounting profit as the firm’s total revenue minus only the firm’s explicit costs. In other words, they ignore the implicit costs. • When total revenue exceeds both explicit and implicit costs, the firm earns economic profit. • Economic profit is smaller than accounting profit