Question

TRUE/FALSE.

1. If choice A wins over choice B in a majority vote, while choice B wins over choice C in a majority vote, then we can conclude that choice A would win over choice C.

2. Normal profit is an implicit cost.

Answer 1

Ans.1- True

It follows from the axiom of transitivity.

Ans.2- True

Normal profit describes the unpaid value of a business owner's time, or the minimum amount of profit that could sustain the business owner in his present model of production. Because he owns the business, he does not pay himself a salary; instead, he takes the money he could be earning and reinvests it into the business Because it does not involve the actual spending of money, normal profit is classified as an implicit cost of doing business.