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Economic profit versus accounting profit

Economic profit versus accounting profit: Managerial Economics
Economic profit versus accounting profit: Managerial Economics

Profit is calculated as the difference between revenues and costs. This is what we call “accounting profit”. In order to calculate “economic profit”, we need to consider “Sunk costs” and “opportunity costs”. The difference between “economic profit” and “accounting” profit is crucial for managerial decisions and is often the reason for the confusion and misunderstandings.

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Skill Level Intermediate
1h 20m
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Skills covered in this course
Business Accounting Management Leadership

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