If accounting profits are less than opportunity costs, there will be economic losses.
What is opportunity costs?
- When economists speak of a resource's "opportunity cost," they are referring to the value of the next-highest alternative use of that resource. For instance, if you spend time and money going to the movies, you are not allowed to use that time and money to watch a movie at home or buy something else.
- Explicit and implicit opportunity costs are the two categories of opportunity costs. A direct monetary value can be placed on explicit opportunity cost.
- Opportunity cost is a term used in economics to describe the values or advantages that a company, business owners, or organizations forego when they pick one option over another while making decisions regarding their operations.
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