If ABC Typing Service generates a return exceeding the opportunity cost of capital, then ?
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Answer: D. the firm is earning are economic profit
Explanation
Economic profit requires total revenue to exceed all explicit and implicit opportunity costs. The opportunity cost of capital represents the minimum return required by investors. Earning returns above this threshold guarantees that positive economic profit is generated. Accounting profit accounts solely for explicit monetary expenses incurred by the business. Economic profit incorporates implicit costs like foregone wages and capital returns. Zero economic profit indicates that a firm covers all opportunity costs perfectly.
Entrepreneurs decide whether to stay in a market based on economic profit signals. Long-run equilibrium in competitive markets drives economic profits down to zero. Investors allocate funds toward industries offering the highest expected economic returns. Option A incorrectly suggests standard normal profit conditions rather than surplus earnings. Option B describes a losing enterprise where revenue fails to cover total expenses. Option C implies abnormal cost structures rather than excess return generation.
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Answer: C. Open Market operations
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Answer: D. Complements
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Answer: C. public good
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Answer: D. is static; low; rises; deficit
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