If a business owner is maximizing their economic profit, the owner:
A)might be suffering accounting losses.
B)cannot have any implicit opportunity costs.
C)is better off financially than with any other use of the resources used in the business.
D)has implicit opportunity costs that are larger than the direct financial costs.

Question

Quizplus · Accepted Answer

Maximizing economic profit means that the business owner is earning the highest possible profit from their resources, taking into account all explicit and implicit costs. This means that the owner is better off financially than with any other use of the resources used in the business. It is possible that the owner is suffering accounting losses but is still maximizing their economic profit by earning enough revenue to cover both explicit and implicit costs. Implicit opportunity costs are already taken into account when calculating economic profit, so it cannot be larger than the direct financial costs.

If a Business Owner Is Maximizing Their Economic Profit, the Owner