Which of the following statements best describes the relationship between economic profit and accounting profit, and their effects on market behavior?

Economic profit and accounting profit are two different ways to measure a company's financial success. Accounting profit is what we see on financial statements; it is the total revenue minus explicit costs, like salaries and rent. Economic profit, on the other hand, takes into account both explicit costs and implicit costs, which include the opportunity costs of the resources used, such as the income the owner could have earned elsewhere. When a company has a positive economic profit, it indicates that it is doing better than just covering its costs, which can encourage more investment and competition in the market. For example, if a bakery earns $10,000 in accounting profit but could have made $5,000 in a different job, its economic profit is only $5,000, showing that it is still making a profit but less than it could potentially earn.