Which Statement Is True About a Firm That Earns ZERO

question 69

Multiple Choice

Which statement is true about a firm that earns ZERO economic profit?

• A) The firm is competing in a non-competitive environment.
• B) The market must have high entry barriers to other firms.
• C) The NPV of projects the firm considers equals zero.
• D) The accounting income for projects equals zero.

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Definitions:

Capital

Financial assets or the value of financial assets used for the creation of goods or services or for investing.

Pledging

The act of providing an asset as security or collateral for a loan, ensuring the lender can claim the asset if the loan is not repaid.

Receivables

Money owed to a company by its clients or customers for goods or services provided on credit.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for, considered an asset on the balance sheet.