Normal profit means;
Normal profit means;
- A) All the accountant cost are covered but not all the economist cost
- B) All the economist cost are covered but not all the accountant cost
- C) More than economist cost are covered
- D) None of the Economist and Accountant costs is covered
Correct Answer: A) All the accountant cost are covered but not all the economist cost
Explanation
This question is asking us to select the option that best defines normal profit. Normal profit is a term used in economics to refer to the minimum level of profit required for a business to stay in operation. It is the profit level where all the costs of production, including both the accountant costs (such as rent, wages, and materials) and economist costs (such as opportunity costs) are covered.
Option A is the correct option, as it says that all the accountant costs are covered but not all the economist costs. This means that the business is earning enough profit to cover all of its explicit costs (accountant costs) as well as some of its implicit costs (economist costs).
Option B is incorrect, as it states that all the economist costs are covered but not all the accountant costs.
Option C is also incorrect, as it says that more than economist costs are covered, which is not an accurate definition of normal profit.
Option D is also incorrect, as it says that none of the economist and accountant costs are covered, which is not the case for a business operating at a normal profit level.
In summary, normal profit is the minimum level of profit required for a business to stay in operation, where all the costs of production, including both the accountant costs and economist costs, are covered. Option A is the correct option that defines normal profit in this question.