When a firm is earning positive economic profits,this is an indication that the firm

Question

Quizplus · Accepted Answer

Positive economic profits indicate that the firm is generating more revenue than the cost of all inputs, including opportunity costs of using those inputs. This suggests that the firm is using its resources in an efficient and effective way, which is indicative of good management. Therefore, choice B is the best answer. A is incorrect because earning positive economic profits suggests that the firm is doing well in the market, so leaving would not make sense. C is incorrect because while there may be other ways to earn positive economic profits, the fact that the firm is earning them in the current way suggests that it is using its resources effectively. D is also incorrect because producing at the minimum ATC does not necessarily indicate that the firm is earning positive economic profits.

When a Firm Is Earning Positive Economic Profits,this Is an Indication