Which of the following is most likely to be true of economic and accounting profits?

a. economic profits are less than accounting profits.
b. accounting profits are less than economic profits.
c.economic profits plus accounting profits equal zero.
d. accounting profits minus economic profits equal zero.

I think it is (A) am i right?

I too think A

To determine the correct answer, let's first understand the differences between economic and accounting profits:

Economic profit takes into account both explicit and implicit costs. Explicit costs include the actual out-of-pocket expenses incurred in the production process, such as wages, rent, and raw materials. Implicit costs, on the other hand, represent the opportunity cost of utilizing resources in a specific way, like the forgone income from the next best alternative.

Accounting profit, on the other hand, only considers explicit costs. It is calculated as total revenue minus explicit costs.

Given this information, we can now analyze the answer choices:

a. economic profits are less than accounting profits.
In most cases, economic profits are expected to be lower than accounting profits because economic profit considers the additional implicit costs that accounting profit does not account for. Therefore, this answer choice seems plausible.

b. accounting profits are less than economic profits.
This answer choice contradicts the usual relationship between economic and accounting profits. Accounting profit does not consider implicit costs, so it is typically higher than economic profit.

c. economic profits plus accounting profits equal zero.
Economic and accounting profits are two separate measures, so adding them together to equal zero is unlikely. Therefore, this answer choice is incorrect.

d. accounting profits minus economic profits equal zero.
Subtracting accounting profits from economic profits does not necessarily result in zero. Therefore, this answer choice is also incorrect.

Based on the analysis above, it seems that option a. (economic profits are less than accounting profits) is the most likely to be true.