Which of the following statements is correct?
A) Economic profits can properly be regarded as the salaries received by the hired managers of corporations.
B) Economic rent is a price paid for productive land resources whose supply is perfectly inelastic.
C) Economic profits would be nonexistent in a dynamic, purely competitive economy.
D) Economic, or pure, profit is the minimum return that entrepreneurs must receive to continue in a particular line of production.

Question

Quizplus · Accepted Answer

Economic rent is a payment made to owners of land or other natural resources for which supply is perfectly inelastic. Economic profits are the profits earned by a firm that exceed its implicit and explicit costs. Option A is incorrect because economic profits are earned by the firm itself, not the hired managers. Option C is incorrect because even in a dynamic, purely competitive economy, economic profits can exist if a firm is able to outperform its competitors. Option D is incorrect because economic or pure profit is the excess of total revenue over the explicit and implicit costs of a firm, and it is not related to the minimum return required by entrepreneurs.

Which of the Following Statements Is Correct