A zero economic profit is not a bad thing because:
A)it is a situation in which the owners,or shareholders,of a firm could not do better elsewhere.
B)it is a situation in which the resources of a firm are always underutilized.
C)it means that a firm is paying an interest rate that is above the market rate.
D)it means that stock prices will not fall.
E)it means that investors are better off in the current venture than they would be in any other investment.

Question

Quizplus · Accepted Answer

Zero economic profit means that the firm is earning enough revenue to cover its costs, including the opportunity cost of the resources used. This situation indicates that the owners or shareholders of the firm are earning a return on their investment that is comparable to what they could earn elsewhere, so they are not losing money by staying with the current venture. Thus, zero economic profit is not a bad thing.

A Zero Economic Profit Is Not a Bad Thing Because