Economic Loss

Definition

Economic loss occurs when a firm's total revenue is less than its total cost, including both explicit and implicit costs. In other words, it means the business is not generating enough income to cover all of its expenses.

Related terms

Opportunity Cost: The value of the next best alternative that must be given up in order to choose one option over another.

Accounting Profit: The difference between a firm's total revenue and explicit costs (such as wages, rent, and materials).

Normal Profit: The minimum level of profit necessary to keep a business running in the long run. It includes both explicit and implicit costs.