Benjiko

Economic profit includes both explicit and implicit costs, including normal profit (the opportunity cost to a firm of using its own capital and the opportunity cost of the time and financial resources of the firm’s owners). This is the amount of money that could be made elsewhere. For example, the owner of a firm is making $20,000 working for his business. If he took a job at a different place, he could be making $50,000. Thus, he is forgoing $30,000. That $30,000 would be accounted for in (subtracted from, since it’s an expense) economic profit, but not in accounting profit.