PRC-3 · Chapter 12 · Question 42 of 69
A firm breaks even exactly, covering all its explicit accounting costs plus the opportunity cost of the entrepreneur's time and capital. In economics, this firm is earning:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Normal profit
Explanation
Normal profit is the minimum level of profit needed to keep a firm in the industry, achieved when Total Revenue equals Total Economic Cost (which includes opportunity costs).
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