If Firm a Is Making Zero Economic Profits

question 65

Multiple Choice

If Firm A is making zero economic profits,

• A) Firm A is also making negative accounting profits.
• B) Firm A is breaking even when opportunity cost is taken into consideration.
• C) other firms want to enter the market.
• D) Firm A wants to leave the market.
• E) Firm A wants to shut down in the short run.

---

Definitions:

Employment-Based Insurance

Employment-based insurance refers to health insurance provided by an employer as part of an employee benefits package, typically covering medical expenses and sometimes dental and vision care.

Adverse Selection Death Spiral

A situation in insurance markets where rising premiums cause healthy people to drop coverage, leaving a pool of mainly high-risk insureds, leading to further rate increases and potentially the collapse of the market.

U.S. Government

The federal government of the United States, consisting of three branches: executive, legislative, and judicial, established by the Constitution.

Common Resource

A resource that is nonexcludable and rival in consumption.