Normal Profit Is A(n)________ Cost Because ________

question 59

Multiple Choice

Normal profit is a(n) ________ cost because ________.

• A) implicit; it represents the cost of not running another firm
• B) explicit; a firm must pay income taxes on its profit
• C) implicit; it represents the cost of economic depreciation
• D) accounting; wages are considered an explicit cost
• E) depreciation; the equipment the firm owns wears out over time

---

Definitions:

GIC

A Guaranteed Investment Certificate (GIC) is a type of Canadian investment that offers a guaranteed return over a fixed period.

Monthly Compounded

Interest on an investment or loan is calculated monthly and added to the principal, allowing the interest to earn interest in subsequent months.

Nominal Rate

The stated interest rate of an investment or loan, not accounting for compounding or inflation effects.

Annual Rate

The interest rate for a period of one year, often used to compare the yearly interest between financial products without compounding.