In the context of calculating profit, how does the concept of opportunity cost differ from explicit and implicit costs?

Opportunity cost is the value of the next best alternative that you give up when making a choice. This is different from explicit costs, which are actual payments made, like money spent on materials or rent. Implicit costs, on the other hand, represent the value of what you forgo, such as the income you could have earned if you worked somewhere else instead of starting your own business. For example, if you open a bakery, your explicit costs include ingredients and rent, while your implicit costs include the salary you could have earned working a regular job. Therefore, opportunity cost combines both explicit and implicit costs to show the true cost of your decision, helping you understand what you are really losing by choosing one option over another.