When firms in a competitive market are experiencing zero economic profits,this is an indication that
A)They should be producing a different product.
B)There is currently no better way to use society's scarce resources.
C)They will eventually go bankrupt.
D)Accounting losses are being experienced by these firms.

Question

Quizplus · Accepted Answer

Zero economic profits indicate that the firms are earning enough revenue to cover their costs, but not generating any additional surplus. This suggests that the resources are being used efficiently and there is no better way to allocate them at this time. It does not necessarily mean that the firms should change their product or that they will go bankrupt. It also does not indicate accounting losses as these firms are earning enough to cover their costs.

When Firms in a Competitive Market Are Experiencing Zero Economic