Why is normal profit an opportunity cost?
What will be an ideal response?
Normal profit is the return to a firm's owner for the owner's supply of entrepreneurial ability and labor to the firm's production process. Using the owner's ability to run the business implies that the owner could have received a return for using it in another capacity, such as running another firm. This cost is an opportunity cost for the firm because it is the cost of a forgone alternative, which is running another firm, and must be included in calculating the firm's opportunity cost of production.
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Which of the following statements is correct with respect to endogenous growth models?
a. Changes in government policy that affect savings and investment rates can increase levels of output in the long-run. b. Changes in government policy that affect savings and investment rates can increase the growth rate of output in the long-run. c. Long-run growth rates are not stationary. d. both a and b. e. all of the above.
A major advantage of the corporate form of business organization is the added decision- making authority of the owners
Indicate whether the statement is true or false