Question

In October 2018 JPMorgan Chase & Co., an American multinational investment bank and financial services company, announced third-quarter profits of $8.38 billion. This implies

A. an economic profit of $8.38 billion with a lower accounting profit.

B. an accounting profit of less than $8.38 billion.

C. an accounting profit of $8.38 billion with a lower economic profit.

D. an accounting profit of $8.38 billion with a higher economic profit.

E. None of the above.

Answer 1

C. an accounting profit of $8.38 billion with a lower economic profit.

($8.38 billion is the accounting profit and the economic profit is always lower than the accounting profit because it includes opportunity cost as well.)