[amp_mcq option1=”Normal profit is zero” option2=”Economic profit is zero” option3=”Total revenues equal its explicit costs” option4=”Total revenues equal its implicit costs” correct=”option1″]
The correct answer is: A. Normal profit is zero.
Normal profit is the minimum amount of profit that a firm must earn in order to stay in business. It is equal to the opportunity cost of the resources used by the firm. If a firm’s revenues just coverall its opportunity costs, then it is earning normal profit.
Option B is incorrect because economic profit is the total profit that a firm earns, including normal profit. If a firm’s revenues just coverall its opportunity costs, then it is earning zero economic profit.
Option C is incorrect because total revenues are the total amount of money that a firm earns from selling its goods or services. If a firm’s revenues just coverall its opportunity costs, then its total revenues are equal to its explicit costs.
Option D is incorrect because implicit costs are the opportunity costs of the resources that a firm owns. If a firm’s revenues just coverall its opportunity costs, then its implicit costs are zero.