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AP® Microeconomics

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Chris and Will's Homemade Lemonade

APMICR-5GSNBJ

Chris and Will are debating the possible profits that they can bring home through the production and sale of their homemade lemonade.

After considering the significance of implicit and explicit costs, they determine that accounting profits are

A

greater than economic profits because accounting profits do not take explicit costs into account.

B

equal to economic profits because accounting costs include all opportunity costs.

C

smaller than economic profits because the accounting profits do not take implicit costs into account.

D

greater than economic profits because accounting profits do not take implicit costs into account.

E

smaller than economic profits because accounting profits do not take explicit costs into account.