What's The Deal Dirk?

Student Q&A's with Dirk

If a perfectly competitive firm is at the breakeven point, does this mean that it has an accounting profit of zero?

This question asked by Anonymous

Actually, it has an economic profit of zero and a positive accounting profit. The difference occurs because economists subtract implicit costs and accountants do not. Therefore a zero economic profit is not a bad thing, it means that you covered your opportunity cost, so you could not have done better anywhere else.

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