The correct answer is: A. which compels an entrepreneur to remain in the same industry.
Normal profits are the minimum profits that an entrepreneur must earn in order to remain in the same industry. They are also known as risk-return profits or opportunity costs. Normal profits are necessary to cover the entrepreneur’s costs of production, including the cost of capital, the cost of labor, and the cost of materials. They also include a return on the entrepreneur’s investment, which is a reward for the risk that the entrepreneur takes in starting and running a business.
Option B is incorrect because it does not take into account the cost of capital. Option C is incorrect because it does not take into account the cost of labor. Option D is incorrect because profits are not fixed by the government.
Here is a more detailed explanation of each option:
- Option A: Normal profits are the minimum profits that an entrepreneur must earn in order to remain in the same industry. They are also known as risk-return profits or opportunity costs. Normal profits are necessary to cover the entrepreneur’s costs of production, including the cost of capital, the cost of labor, and the cost of materials. They also include a return 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z"/> Subscribe on YouTube