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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. |
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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.