Explain the concept of economic profit.

Explain the concept of economic profit.

Economic profit refers to the difference between total revenue and total cost, including both explicit and implicit costs. It takes into account not only the explicit costs, which are the actual expenses incurred by a firm, but also the implicit costs, which are the opportunity costs of using resources in a particular way. In other words, economic profit measures the profitability of a business by considering both the explicit and implicit costs associated with its operations. It is important for firms to maximize economic profit in order to ensure long-term sustainability and growth.