The Difference Between Zero Accounting Profit and Zero Economic Profit

question 208

Multiple Choice

The difference between zero accounting profit and zero economic profit is that

• A)an economic profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital.
• B)an economic profit of zero indicates an unacceptable rate of return because it does not include the opportunity cost of a firm's capital.
• C)an economic profit of zero indicates more than a fair rate of return because it includes opportunity cost and explicit cost.
• D)an accounting profit of zero indicates a fair rate of return because it includes the opportunity cost of a firm's capital.

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