If a Firm Makes Zero Economic Profit,then the Firm

question 92

Multiple Choice

If a firm makes zero economic profit,then the firm

• A) has no incentive to stay in the industry.
• B) is better off exiting the industry.
• C) is indifferent between staying and exiting the industry.
• D) will shut down.

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Definitions:

Stock Option Plan

A compensation scheme in which employees are given the option to purchase company stock at a discounted price, intended to align their interests with those of the company's shareholders.

Employee Turnover

The rate at which employees leave a company and are replaced by new employees, indicating the stability and retention capacity of a workplace.

Measurement Date

The specific point in time at which the value of an asset or liability is determined for accounting purposes.

Intrinsic Value Method

A valuation technique which determines the underlying worth of an asset based on its perceived or calculated true value, rather than its current market price or book value.