The type of profit that considers opportunity costs is…

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BlackTom AI · Accepted Answer

The question asks about the type of profit that takes opportunity costs into account.
In economic theory, profit can be viewed through different lenses. When we subtract both explicit costs (out-of-pocket payments) and implicit costs (opportunity costs) from total revenue, we obtain economic profit. This contrasts with accounting profit, which subtracts only explicit costs and ignores the value of foregone alternatives.
The term often used for this concept is economic profit, sometimes referred to by the acronym EVA (economic value added) in some contexts, which emphasizes value created after accounting for the cost of all capital employed and the opportunity costs of the resources used.
Because opportunity costs represent the value of the next-best alternative foregone, including them provides a more complete picture of true profitability and resource use efficiency. Without considering them, a business might appear profitable on an accounting basis while actually underperforming when the true cost of resources is considered.
If there were other options listed, we would compare each choice against these definitions: options that exclude implicit costs or focus only on revenue, or that mischaracterize EVA, would be incorrect, while the option that centers on subtracting both explicit and implicit costs would align with economic profit.

MSB-250-300-002 Proctored Midcourse Exam 1

The type of profit that considers opportunity costs is…

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