Accounting profits only take into account money in versus money out and are consistent with what a business would show as a profit in its bank account or tax return. Economic Profits start at the point of Accounting Profit but then deduct implicit or economic costs. These are the things that you don’t have to pay cash money for, but nonetheless force you to make some sort of trade-off. If you were to open your own small business today, what would be your economic or implicit cost? Provide your answer in words, but try to quantify it if at all possible in terms of hourly, weekly or monthly costs. If your trade-off is not quantifiable (and they won’t all be), explain why you can’t narrow it down to a number.




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