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The Difference Between Zero Accounting Profit and Zero Economic Profit

Question 171

Multiple Choice

The difference between zero accounting profit and zero economic profit is that


A) an economic profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital.
B) an economic profit of zero indicates an unacceptable rate of return because it does not include the opportunity cost of a firm's capital.
C) an economic profit of zero indicates more than a fair rate of return because it includes opportunity cost and explicit cost.
D) an accounting profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital.

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