Why should managers mainly focus on economic profits?

Economic profits are the revenue that a firm gets after subtracting both the implicit and explicit cost.

Managers focus on economic profits because when the opportunity cost is taken into consideration a manager is able to determine their profits. This provides a platform for the managers to make an appropriate decision on how they should allocate resources effectively.

Economic profits keep the manager in track to ensure that the economic cost does not exceed the accounting cost of the available resources. This shows how effective a firm is performing to ensure it operates on a profit.