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If this person runs a software company, and the company earns $1,000,000, it must subtract incurred supplies/expenses of $850,000. The owner is left with $150,000 accounting profit. However, when one subtracts the opportunity cost of the income the owner would have earned from an employer ($200k), the true economic profit remaining is - $ 50k. Therefore owning a software company is not profitable, and leaves the owner in the negative for an actual salary amount.
Accounting profits do not calculate the opportunity cost into their equation. Accounting profits are simply sales revenue minus accounting cost...
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