If economic profit is zero, a firmA) earns a negative rate of return.B) will leave the industry.C) earns a positive but below normal rate of return.D) earns exactly a normal rate of return.

Question

If economic profit is zero, a firmA)  earns a negative rate of return.B)  will leave the industry.C)  earns a positive but below normal rate of return.D)  earns exactly a normal rate of return.

Amiya Huber · Accepted Answer

Final Answer : D, Explanation :  When economic profit is zero, it means that the firm is earning exactly a normal rate of return, covering all its opportunity costs including a normal profit. This is considered a break-even situation in economic terms, where the firm is doing as well as it could by investing its resources elsewhere.

If economic profit is zero, a firm

A) earns a negative rate of return.
B) will leave the industry.
C) earns a positive but below normal rate of return.
D) earns exactly a normal rate of return.

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