When economic profits in an industry are zero and implicit costs are positive, _____.

Question

Quizplus · Accepted Answer

When economic profits are zero, it means the firm is earning just enough revenue to cover its explicit and implicit costs. However, if implicit costs are positive (such as the opportunity cost of the owner's time), accounting profits will still be positive because they only take into account explicit costs. Therefore, choice A is correct.

When Economic Profits in an Industry Are Zero and Implicit