Multiple choice

If profit is greater than zero, it means

  1. abnormal profit

  2. super normal profit

  3. both (1) & (2)

  4. either (1) or (2)

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When profit is greater than zero, the firm earns more than its total costs including opportunity costs. In economics terminology, this is called 'abnormal profit' or 'supernormal profit' - these terms are synonymous. Normal profit (zero economic profit) occurs when total revenue equals total costs including implicit costs.

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