Joe quits his job as an insurance agent and opens his own sporting goods store. If his profits as measured by his accountant are greater than zero, then
A) he made a good move because he is earning above normal profits.
B) his economic profit must be greater than zero.
C) his opportunity costs must be zero.
D) There is not enough information to determine his economic profit, if any.

Question

Quizplus · Accepted Answer

Accounting profits do not account for opportunity costs, so without knowing Joe's opportunity costs, we cannot determine his economic profit.

Joe Quits His Job as an Insurance Agent and Opens