Firms That Are Earning Zero Economic Profits Are

question 237

Multiple Choice

Firms that are earning zero economic profits are

• A) breaking even.
• B) earning less than a normal rate of return.
• C) shutting down in the short run.
• D) shutting down in the long run.

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Definitions:

Incentive Bonus

A form of additional compensation paid to an employee as a reward for achieving certain goals or exceptional performance.

Gross Return

The total return on an investment before any deductions for fees or expenses.

Expense Ratio

A measure of what it costs an investment company to operate a mutual fund, expressed as a percentage of the fund's average assets per annum.

Total Expense Ratio

It quantifies the total cost of fund management and operating expenses, expressed as a percentage of the fund’s total assets.