If a firm in a price-taker market is earning zero economic profit, it
A) will shut down in the long run but not the short run.
B) will also be earning zero accounting profit.
C) is doing as well as typical firms in other markets.
D) will shut down in the short run.

Question

Quizplus · Accepted Answer

If a firm in a price-taker market is earning zero economic profit, it is still covering all of its costs, including opportunity costs. This is considered a normal rate of return and is doing as well as typical firms in other markets. The firm will not shut down in either the short run or the long run.

If a Firm in a Price-Taker Market Is Earning Zero