Raheem is considering starting a new business selling handcrafted furniture. He calculates that his accounting profit would be $50,000 after deducting explicit costs, but his economic profit is only $20,000 after considering the salary he would forgo from his current job. Which category does Raheem's situation best illustrate?

Raheem's situation best illustrates the difference between accounting profit and economic profit. Accounting profit is the money he makes after subtracting direct costs, which in his case is $50,000. However, economic profit takes into account both explicit costs and opportunity costs, like the salary he would lose by leaving his job. Since his economic profit is only $20,000, this shows that while he is making money, he is also giving up a significant amount of income from his current job. This example highlights that economic profit gives a fuller picture of the true cost of Raheem's decision to start a new business.