A firm's economic profit is zero when its total revenue is equal to its:
Correct answer: A. Total economic cost, including opportunity cost
- A. Total economic cost, including opportunity cost
- B. Accounting cost, excluding opportunity cost
- C. Fixed cost, excluding variable cost
- D. Marginal cost at the chosen output
Explanation
Economic profit subtracts both explicit costs and the opportunity cost of resources owned by the firm. Zero economic profit means the firm earns a normal return, not that accounting revenue is zero.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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