In the long run, assuming that the owner of a firm in a competitive industry has positive opportunity costs, she
A)should exit the industry unless her economic profits are positive.
B)will earn zero accounting profits but positive economic profits.
C)will earn zero economic profits but positive accounting profits.
D)should ignore opportunity costs because they are a type of sunk cost that disappears in the long run.

Question

Quizplus · Accepted Answer

In the long run, firms in a competitive industry earn zero economic profits, meaning total revenue equals total costs, including opportunity costs. However, they can still earn positive accounting profits, which do not account for opportunity costs.

In the Long Run, Assuming That the Owner of a Firm