Question

Normal profit can best be described as ______.

Options

• A bonus given to workers

• Extra profit earned in the short run

• The opportunity cost of the entrepreneur’s own capital and effort

• Profit after tax

Answer 1

Normal profit can best be described as the opportunity cost of the entrepreneur’s own capital and effort.

Explanation:

Normal profit is the minimum reward that just covers the opportunity cost of the entrepreneur’s capital and effort, keeping the firm in the industry.