Total revenue minus the total _____ costs of production is accounting profit.Multiple choice question.normalexplicitimplicitinterior

To solve this multiple-choice question, let's analyze the options provided and their relevance to the concept of accounting profit.

Break Down the Problem

1. We need to identify the correct term that completes the statement about accounting profit.
2. The context is about costs and profits, which suggests a focus on how expenses affect profit calculations.

Relevant Concepts

1. Accounting Profit Formula: Accounting profit is calculated as: $\text{Accounting Profit} = \text{Total Revenue} - \text{Total Explicit Costs}$ Here, explicit costs are actual out-of-pocket expenses, such as wages, rent, and materials used in production.

Analysis and Detail

1. Normal Costs: This term generally refers to a standard or expected cost, but it does not directly relate to profit calculations.
2. Explicit Costs: These are direct, out-of-pocket expenses that are clearly defined and easily measurable. They are crucial in determining accounting profit.
3. Implicit Costs: These are indirect costs that represent the opportunity costs of using resources. While important in calculating economic profit, they do not figure into accounting profit.
4. Interior Costs: This term is not commonly used in economic contexts related to profit calculation.

Verify and Summarize

Among the options provided:

• The correct term that completes the statement is “explicit” since accounting profit specifically requires the deduction of explicit costs from total revenue.

Final Answer

Total revenue minus the total explicit costs of production is accounting profit.