If economic profit is equal to zero, then
A) the entrepreneur's profit as measured by accountants is also equal to zero.
B) the entrepreneur's profit as measured by accountants must be less than zero.
C) the entrepreneur is earning only a normal profit.
D) The entrepreneur's profit cannot be determined based on the information given.

Question

Quizplus · Accepted Answer

Economic profit equal to zero means that the entrepreneur is covering all their costs, including opportunity costs. This implies that the profit earned is just enough to cover what they could have earned in their next-best alternative. Therefore, the entrepreneur is earning only a normal profit.

If Economic Profit Is Equal to Zero, Then