If firms earn normal profits ?
Correct answer: C. The revenue equal total costs
- A. They will aim to leave the industry
- B. Other firms will join the industry
- C. The revenue equal total costs
- D. No profit is made is accounting terms
Explanation
Normal profit means total revenue covers both explicit and implicit costs, so economic profit is zero. Accounting profit is usually positive because accounting costs exclude implicit opportunity costs.
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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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