Economic Profit
Plain definition
Total revenue minus total opportunity cost — that is, minus both explicit and implicit costs.
In economics
Economic profit is the true surplus over all alternatives. Zero economic profit ('normal profit') means the firm is doing exactly as well as its next-best option — a sign of long-run competitive equilibrium, not failure. Positive economic profit attracts entry, which competition eventually erodes to zero in perfect competition.
Example
Revenue of 220,000 in explicit costs minus 0 economic profit: the owner is covering all opportunity costs exactly.
Economic profit is confused with accounting profit. A business reporting positive accounting profit can still have zero or negative economic profit once the owner's forgone earnings are counted. Do not read 'zero economic profit' as 'breaking even on cash' — it means breaking even on opportunities.