A firm’s economic profit is always less than its accounting profit becauseGroup of answer choiceseconomic profit is always zero, no matter what kind of firm it is.accounting profit considers explicit costs, which economic profit does not.economic profit considers implicit costs, which accounting profit does not.accounting profit considers implicit costs, which economic profit does not.accounting profit is always positive, no matter what kind of firm it is.

The correct answer is: economic profit considers implicit costs, which accounting profit does not.

Here's why:

1. Accounting profit is calculated by subtracting explicit costs (like wages, rent, materials) from total revenue. This is the profit that appears on financial statements and that businesses pay taxes on.

2. Economic profit, on the other hand, takes into account both explicit and implicit costs. Implicit costs are the opportunity costs of using resources already owned by the firm. They represent potential income from the second-best use of the firm's resources. For example, if you use your personal car for business, the implicit cost is what you could have earned by renting it to someone else.

3. Because economic profit accounts for these implicit costs, it is always less than or equal to accounting profit. If a firm is only covering its explicit costs, it will have a positive accounting profit but a zero economic profit. If it's not covering all costs (including implicit costs), it will have a negative economic profit.