Economic profits are not costs of production since the entrepreneur does not require the gaining of an economic profit to keep the firm operating. In economics, costs are whatever is required to keep a firm operating.
According to Prof.Stigler the production function "is the name given to the relation ship between the rates of input and the rate output ".More precisely, it refers to maximum quantity of output that...
Economic profit will never exceed accounting profit. The accountant will calculate total cost using only explicit costs (basically a transfer of money) that the firm makes. On the other hand,...