In the Long Run, Assuming That the Owner of a Firm

question 466

Multiple Choice

In the long run, assuming that the owner of a firm in a competitive industry has positive opportunity costs, she

• A)should exit the industry unless her economic profits are positive.
• B)will earn zero accounting profits but positive economic profits.
• C)will earn zero economic profits but positive accounting profits.
• D)should ignore opportunity costs because they are a type of sunk cost that disappears in the long run.

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Definitions:

Month Ended

Refers to the closing of the accounting period, usually the last day of the month, where businesses summarize financial activities.

Unearned Revenue Account

Refers to money received by a company for goods or services yet to be delivered or performed, recognized as a liability on the balance sheet.

Debit Balance

An accounting term indicating that a particular account has more debits than credits, often referring to an account's overall debt or expenditure.

Credit Balance

In accounting, it refers to the balance on the right side of a ledger account, indicating the amount that a company owes or liabilities.