A firm which makes zero economic profit will still remain in business? True or False?

Question

well, first of all, if economic profit is zero, this would mean that a business is earning normal profit only

so, its false? because why would a firm stay in business when its only earning normal profit? or no? or does anyone have a better explanation for this? id appreciate any comments. thanks

Answer 1

Normal profit vs. Economic profit?  What are the differences?  Are these actual terms?

Technically it could stay in business, at least in an economy without inflation.  If a business totally breaks even, and they can pay for their workers, machines, etc., then I don't see why not.

If you have to pay your bills, and you have exactly enough money to pay for all of them at the end of the month, then you're still good right?  You just hope that next month, you have extra money left over to invest in other things.

Answer 2

True because the firm breaks even, which is a good thing.

Answer 3

When we talk about economic profit, we have to consider opportunity cost.  So, if the economic profit is 0, not only are they paying their bills like Warm said, but also they are also making a profit that is comparable to what they would make if they were doing anything else but what they currently are.

So, they would stay in business.  True.

*ADD ON, The firm does not necessarily have 0 accounting profits.  Would be positive if all other opportunities would have postitive accounting profits.