Which of the Following Is True of Supernormal Pro?ts

question 25

Multiple Choice

Which of the following is true of supernormal pro?ts?

• A) When the costs of all the factors of economic production are greater than revenues, ?rms earn supernormal pro?ts.
• B) As long as there are no barriers to entry, a ?rm in an industry can continue to earn
• C) Supernormal pro?ts are ?nancial returns greater than normal pro?ts.
• D) In the long run, perfectly competitive ?rms earn supernormal pro?ts.

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Definitions:

Overbooking

A strategy used by airlines and hotels where more tickets or rooms are sold than available, based on predicted no-shows.

Chance

A measure of the likelihood or probability of certain events happening, often used in the context of statistical analysis and risk assessment.

Tornado Chart

A graphical method used to display the sensitivity of a result to changes in variables or inputs, resembling a tornado when variables are ranked by importance.

Market Size

The total volume of sales of a specific product or service or the total number of potential customers within a given market.