Which of the following statements is correct regarding normal profits?

Question

Quizplus · Accepted Answer

Normal profits refer to the amount of profit that is just enough to cover the opportunity cost of the resources used in production. Earning normal profits is considered necessary for a business to survive in the long run. Therefore, option B is correct. Option A is incorrect because it describes accounting profits, not normal profits. Option C is also incorrect because in some cases, economic profits can be equal to normal profits. Option D is incorrect because normal profits are not what is left over after economic profits are covered; rather, economic profits are what remain after normal profits have been subtracted from total revenue.

Which of the Following Statements Is Correct Regarding Normal Profits