Asked by
Daniel Romero
on Nov 16, 2024
Verified
When economic profits are zero in equilibrium, the firm's revenue must be sufficient to cover all opportunity costs.
Economic Profits
Profits exceeding the total costs of resources used, including both explicit and implicit costs.
Opportunity Costs
The financial loss associated with overlooking the alternative that is considered second-best when making a choice.
- Become familiar with the ideas of economic profit and accounting profit, and how they affect decisions made by firms.
- Describe the influence of opportunity costs, sunk costs, and fixed costs on the strategic choices and profit outcomes of firms.
Verified Answer
AM
Learning Objectives
- Become familiar with the ideas of economic profit and accounting profit, and how they affect decisions made by firms.
- Describe the influence of opportunity costs, sunk costs, and fixed costs on the strategic choices and profit outcomes of firms.