Question

11.  

A firm is making 0 economic profits. This means that:

A.  it can cover variable costs but not fixed costs

B.  it has an opportunity cost equal to its accounting profits

C.  it has explicit costs but no implicit costs

D.  It has explicit and implicit costs equal to zero

E.  it has revenue equal to its implicit costs

12.  

A firm is making 0 economic profit. This means that:

A.  firms want to enter the industry

B.  firms want to exit the industry

C.  firms want to both enter and exit the industry

D.  firms do not want to exit or enter the industry

13.  

A firm making zero economic profits is broke and will eventually leave the industry.

T/F

14.  

If a firm has supranormal profits, then other firms want to enter.T/F

15.	Firms can enter an industry in the short run.T/F

Answer 1

11. A firm making zero economic profit means it has an opportunity costs equals to its accounting profits.

12. A firm making zero economic profit means firms want to both enter and exit the industry.

13. A firm making zero economic profit is broke and eventually leaves the industry is a true statement.

14. Supernormal profit is all the excess profit a firm makes above the minimum return necessary to keep a firm in business. Therefore, if a firm has supernormal profits, then other firms want to enter is a true statement.

15. Yes, Firms can enter an industry in the short run