A firm earning a normal profit
A) should exit the industry.
B) will shut down.
C) has no incentive to leave the industry.
D) is covering explicit costs but not implicit costs.
E) is covering implicit costs but not explicit costs.

Question

Quizplus · Accepted Answer

A firm earning a normal profit is covering both explicit and implicit costs and is not making any economic profit. Therefore, there is no incentive for the firm to exit the industry.

A Firm Earning a Normal Profit