- Which of the following measures of profit is most likely necessary for a firm to stay in business in the long run? A. Economic B. Normal C. Accounting Is it B?? I don’t have the answer key to this test because the link to it is somehow broken. Which is why I’m here asking. Thanks!
Yep the correct answer is B, “Normal”
Yes it is Normal. Normal profit is the one making the economic profit = 0 so Normal profit = accounting profit - economic profit. In order to operate in the long term, you need an economic profit of 0 or higher, and therefore, the normal profit is the relevant one.
I knew straight away econ profit had to be zero. if I apply that equation, then why couldnt the answer also be accounting profit?