If a firm makes zero economic profit, then the firm A. has total revenues greater than its economic costs. B. must shut down. C. must have no fixed costs. D. has accounting profit equal to their implicit costs.

If a firm makes zero economic profit, then the firm A. has total revenues greater than its economic costs. B. must shut down. C. must have no fixed costs. D. has accounting profit equal to their implicit costs.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter22: Getting Divisions To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 3MC

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

If a firm makes zero economic profit, then the firm

A.
has total revenues greater than its economic costs.
B.
must shut down.
C.
must have no fixed costs.
D.
has accounting profit equal to their implicit costs.

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