What is the difference between Accounting and Economic Profit?

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing?

 

What is the difference between Accounting and Economic Profit?

Accounting profit is the total of company earnings calculate using the GAAP and includes all the explicit costs of operating business while Economic Profit is the difference between the revenue received from the sales and the cost of inputs in the production including the opportunity costs.

Step-by-step explanation

What is the difference between Accounting and Economic Profit?

Accounting profit is the total earnings of a company calculated using the GAAP and includes all the explicit costs of operating business while Economic Profit is the difference between the revenue received from the sales and the cost of inputs in the production including the opportunity costs.

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing?

 Yes. If marginal cost is? increasing, then average total cost will be decreasing.

The average total costs will be decreasing because additional unit does not increase the fixed costs in the production process. This makes the cost of producing additional unit to be increasing while the average total costs to be decreasing.