Economic profit

Economic profit is the total revenue a business earns minus all its explicit costs (like wages and materials) and implicit costs (such as foregone income from the owner’s time or investments). Unlike accounting profit, which only considers explicit costs, economic profit accounts for opportunity costs—the value of the next best alternative forgone. A positive economic profit means the business is earning more than it would in its next best alternative, signaling a profitable and efficient operation. If economic profit is zero, the business earns just enough to cover all costs, including opportunity costs, but isn't gaining extra profit.