Which of the following statements is true?
A)Normal profits = economic profit
B)Normal profits = zero economic profits
C)Economic profit = accounting profit
D)Economic profit

Question

Which of the following statements is true?
A)Normal profits = economic profit
B)Normal profits = zero economic profits
C)Economic profit = accounting profit
D)Economic profit < normal profit

Quizplus · Accepted Answer

Normal profits refer to the minimum amount of profit required for a business to continue operating in the long run. It is equal to zero economic profits because economic profit considers both explicit and implicit costs, while normal profits only consider explicit costs. Therefore, if a business earns a normal profit, it is just earning enough to cover its explicit costs, making zero economic profit.

Which of the Following Statements Is True