Question

Which of the following best describes accounting costs:

Group of answer choices

The difference between total economic costs and opportunity costs

The sum of total economic costs and opportunity costs

The best alternative use of resources

Long run fixed costs

Answer 1

Accounting cost only includes the explicit cost that firm occurs during the course of production, whereas economic cost includes the explicit cost as well as the opportunity cost of using the factors of production. So, the right answer is, the difference between total economic costs and opportunity costs. Because when we deduct the opportunity cost from the economic cost, we are left with the accounting cost.