In economic analysis,any amount of profit earned above zero is considered "above normal" because
A)normally firms are supposed to earn zero profit.
B)this would indicate that the firm's revenue exceeded both its accounting and opportunity cost.
C)this would indicate that the firm was at least earning a profit equal to its opportunity cost.
D)this would indicate that the firm's revenue exceeded its accounting cost.

Question

Quizplus · Accepted Answer

In economic terms, "above normal" profit occurs when a firm's revenue exceeds both its accounting and opportunity costs. Accounting costs are the explicit costs of production, while opportunity costs represent the value of the best alternative use of resources. Earning above these costs indicates the firm is not only covering its explicit costs but also earning more than what it could have earned in the next best alternative, hence making an "above normal" profit.

In Economic Analysis,any Amount of Profit Earned Above Zero Is