Question

The difference between zero profit and zero economic profit is that:
a. economists include opportunity cost in zero economic profit, while accountants do not include opportunity cost in zero profit.
b. economists do not include opportunity cost in zero economic profit, while accountants do include opportunity cost in zero profit.
c. economists include opportunity cost in zero profit, while accountants do not include opportunity cost in zero economic profit.
d. economists do not include opportunity cost in zero profit, while accountants do include opportunity cost in zero economic profit.

Answer 1

Answer:

The correct answer is letter "A": economists include opportunity cost in zero economic profit, while accountants do not include opportunity cost in zero profit.

Explanation:

Normal profit is an economic term that means zero economic profits. To an economist, this is normal since total revenue equals total cost which includes both explicit and implicit costs. It differs from the accounting profit or zero profits since the latter does not take into consideration implicit cost.