A Firm That Makes Zero Economic Profits

question 10

Multiple Choice

A firm that makes zero economic profits

• A)Must eventually go bankrupt and exit the industry.
• B)Does not cover its variable costs and should shut down in the short run.
• C)Incurs an accounting loss if fixed costs are greater than variable costs.
• D)Covers all its costs,including a provision for normal profit.

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Definitions:

Court Order

A directive issued by a judge that requires a party to do or abstain from doing something.

Attachment

The legal process of seizing a debtor's property or assets to secure or satisfy a judgment.

Enforceable

Refers to a legal agreement or obligation that can be upheld by law.

Third Parties

Individuals or entities not directly involved in a contract or legal agreement, but who may be affected by its outcomes or may hold rights or interests under it.