Question

If the owner of a firm earns zero economic profit, he or she has earned total revenue equal to his or her:______

a. implicit costs.
b. explicit costs.
c. accounting profit.
d. implicit costs plus explicit costs.

Answer 1

The answer is D.

Step-by-step explanation:

Zero economic profit means normal profit.

Economic profit = total revenue - [implicit cost(opportunity cost) plus explicit cost]

So when economic profit is zero, total revenue earned will equal to the sum of implicit cost and explicit cost.

Explicit cost is the normal accounting cost while implicit cost is the opportunity cost.