If a firm goes out of business because of negative economic profits,its books
A) might indicate a positive accounting profit.
B) might indicate that opportunity costs were zero.
C) might indicate that taxes are too high.
D) might suggest a mistaken value of explicit costs.

Question

Quizplus · Accepted Answer

A firm can have a positive accounting profit but still go out of business due to negative economic profits, as economic profits consider both explicit and implicit (opportunity) costs, whereas accounting profits do not account for opportunity costs.

If a Firm Goes Out of Business Because of Negative