Evaluate this statement: “If the economic profit is zero, a business will shut down.”
Please provide the best answer for the statement.
This statement is incorrect. If economic profits are zero, it means the business is covering all of its explicit and implicit costs, including the normal profit. Thus the business has no incentive to shut down and open a business in another industry, and it will maintain its line of work.
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Suppose Warren Buffet withdraws $1 million from his checking account at Chase Bank. If the required reserve ratio is 20 percent, what is the maximum change in deposits in the banking system?
A) -$5 million B) -$4 million C) -$200,000 D) $1 million E) $5 million
Price controls will tend to cause misallocation of resources because
a. production (or opportunity) cost no longer corresponds to market price. b. people are unable to determine their preferences at the high or low price. c. producers no longer have incentive to be profitable. d. consumers no longer have incentive to spend their income efficiently.