Which of the following measures of profit is most likely necessary for a firm to stay in business in the long run?
A is correct. Normal profit is the level of accounting profit needed to just cover the implicit opportunity costs ignored in accounting costs. This is all that a firm needs to earn in the long run to remain in business. Failing to earn normal profits over the long run has a debilitating impact on the firm’s ability to access capital and to function properly as a business enterprise.