Question

Find the correct matching of the items of List-I with the items of List-II given below:

List-I	List-II
(a) Normal Profit	I. Excess of total revenue over total explicit cost
(b) Economic profit	II. Total revenue equals total economic cost
(c) Accounting profit	III. Excess of total revenue over total of explicit and implicit costs and a normal rate of return

• A. $I-\left(c\right),II-\left(a\right),III-\left(b\right)$
• B. $I-\left(b\right),II-\left(a\right),III-\left(c\right)$
• C. $I-\left(a\right),II-\left(b\right),III-\left(c\right)$
• D. $I-\left(a\right),II-\left(c\right),III-\left(b\right)$

Answer 1

The correct option is A $I-\left(c\right),II-\left(a\right),III-\left(b\right)$

Normal profit occurs when the difference between a company's total revenue and combined explicit and implicit costs are equal to zero.

Accounting profit = total monetary revenue- total costs. Economic profit is the monetary costs and opportunity costs a firm pays and the revenue a firm receives. Economic profit = total revenue – (explicit costs + implicit costs).