A firm which owns its own equipment and is earning positive economic profits

Question

Quizplus · Accepted Answer

When a firm earns positive economic profits, it means that its revenues exceed both its explicit and implicit costs. Since implicit costs, such as opportunity costs, are not reflected in accounting profits, earning positive economic profits implies that the firm is also earning positive accounting profits. Additionally, owning its own equipment suggests that the firm is not incurring rental or lease expenses, which would further increase its accounting profits. Therefore, option A is the correct choice.

A Firm Which Owns Its Own Equipment and Is Earning