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Basic Question 8 of 8
The return that a firm's entrepreneur can expect to obtain in the best alternative business is ______.
B. economic profit
C. normal profit
A. opportunity cost
B. economic profit
C. normal profit
User Contributed Comments 12
| User | Comment |
|---|---|
| patsy | ??? should t not be A? |
| zzhumanov | The question is about return, not cost. |
| odette | Every entrepreneur expects to get a NORMAL profit not ECONOMIC profit. |
| jmcohen87 | i think return/cost doesnt make a difference...normal profit is part of opport. cost. the amount the etreprenuer can make in another business is the normal profit |
| wulin | Normal profit = Oppo. Cost in terms of value. But they are not exactly the same. One is profit/return, one is cost. |
| Nyoiks | Every investor given another alternative expects to atleast break even. Hence Normal profits. opportunity costs is the sum of all costs an investor is exposed to including normal profit. |
| AUAU | normal profit (loss) = Total Revenue - total cost. if > o then profit ; = o breakeven ; otherwise loss econonic profit include the costs of implicit costs like alternative opportunity costs eg. alternative land use or plant uses |
| geofin | From the notes: "normal profit" is effectively the total implicit opportunity cost. So answers A and C are "effectively" the same... |
| gill15 | Geofin - No normal profit = IOcost only when EProfit = 0 |
| CHUCKYT | Normal profit is the market rate of return that the resources would otherwise earn which equals the implicit opportunity costs. Opportunity costs consist of implicit and explicit costs. |
| dmfz | Passing the CFA test will be our normal profit, the time we're studying for this test is our opportunity cost since we could be doing something else. |
| schweitzdm | @CHUCKYT, I don't think opportunity costs consist of explicit costs. |
Thanks again for your wonderful site ... it definitely made the difference.
Craig Baugh
Learning Outcome Statements
determine and interpret break even and shutdown points of production, as well as how economies and diseconomies of scale affect costs under perfect and imperfect competition
CFA® 2024 Level I Curriculum, Volume 1, Module 1.