Firms earning zero economic profit are

a. earning normal profits because their returns on investment are equal to the opportunity costs of the time invested.

b. earning accounting profits because their returns on investment are equal to the opportunity costs of the time invested.

c. losing money and therefore should shut down because their opportunity costs are too high.

d. losing money but they should continue to operate because their opportunity costs are too high.

e. there is not enough information to determine an outcome.

Question

Business

Wilson Riley

20 June, 11:11

Firms earning zero economic profit are

a. earning normal profits because their returns on investment are equal to the opportunity costs of the time invested.

b. earning accounting profits because their returns on investment are equal to the opportunity costs of the time invested.

c. losing money and therefore should shut down because their opportunity costs are too high.

d. losing money but they should continue to operate because their opportunity costs are too high.

e. there is not enough information to determine an outcome.

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Answers (1)

Know the Answer?

Dalton Mccarthy · Answer 1

The answer is letter A. Earning normal profits because their returns on investment are equal to the opportunity costs of the time invested.

Explanation:

Because all resources are being used efficiently and there is no need to use them elsewhere.