Asked by
Georgia Ulassin
on Nov 25, 2024
Verified
If a firm's revenues just cover all its implicit costs, then
A) normal profit is zero.
B) economic profit is zero.
C) total revenues equal its explicit costs.
D) total revenues equal its implicit costs.
Implicit Costs
Refer to the opportunity costs of using resources owned by the business for its operations, without any explicit financial payment.
Economic Profit
The difference between total revenues and total costs, including both explicit and implicit costs, measuring the financial success of a business beyond normal profit margins.
Explicit Costs
Refers to direct monetary expenses businesses incur in their operations, such as wages, rent, and materials.
- Differentiate economic, accounting, and normal profits, calculating them through the application of both explicit and implicit costs.
- Acknowledge the importance of zero economic profits and its implications regarding a firm's relative performance compared to other options.
Verified Answer
BG
Learning Objectives
- Differentiate economic, accounting, and normal profits, calculating them through the application of both explicit and implicit costs.
- Acknowledge the importance of zero economic profits and its implications regarding a firm's relative performance compared to other options.