* i.e. use $300,000 savings to buy factory, but could have invested it at interest rate of 5%/year * ∴ forgone $15,000/year in interest income = implicit opportunity cost of business * i.e. use $100,000 savings and borrow $200,000 from bank * Explicit cost will now include $10,000 paid to bank in interest * Opportunity cost is still $15,000 (OC of $10,000 paid to bank is $10,000 and there is a forgone interest savings of $5000) * Economic profit = TR – TC (including both explicit and implicit costs) * Accounting profit = TR – TEC (total explicit costs)