Economic profit is always less than or equal to accounting profit due to the inclusion of both explicit and implicit costs in its calculation.

Economic profit is a measure that considers both explicit and implicit costs, while accounting profit only looks at explicit costs. Explicit costs are the direct expenses a business pays, like rent and salaries. Implicit costs are the opportunity costs, which represent the income the business owner could have earned if they chose a different path, like working elsewhere. For example, if a bakery owner could earn $50,000 a year working for someone else but chooses to run their own bakery, that $50,000 is an implicit cost. Because economic profit accounts for both types of costs, it is always less than or equal to accounting profit, which does not include these opportunity costs.