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Question
The profit level that is just enough to cover the explicit costs and opportunity costs of the firm is called the _______
The profit level that is just enough to cover the explicit costs and opportunity costs of the firm is called the _______
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Solution
The correct option is D normal profit
Normal profit is earned when the firm's economic revenue and economic costs are equal. The economic costs consist of explicit and implicit costs incurred (such as opportunity costs). Firms in competitive markets will earn normal profits in the long run.
Normal profit is earned when the firm's economic revenue and economic costs are equal. The economic costs consist of explicit and implicit costs incurred (such as opportunity costs). Firms in competitive markets will earn normal profits in the long run.
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