An entrepreneur quits a job that paid $70,000 per year to start a new consulting business. In the first year, the business generates $200,000 in revenue and incurs $130,000 in explicit costs for office rent, supplies, and utilities. Considering all relevant costs, which of the following statements accurately describes the firm's performance in its first year?

Firm Profitability and Investor Decisions

A company reports total revenues of $1,000,000 and explicit costs (like wages and materials) of $900,000. The minimum return required by the company's investors to keep their capital invested in the business, given the risk and alternative investment options, is $100,000. Based on this information, the company is earning an economic profit greater than zero.

Significance of Zero Economic Profit

Comparing Profitability Measures

Match each economic outcome for a firm with the condition that defines it, considering that total economic cost includes all explicit payments and all implicit opportunity costs.

When a firm's total revenue is exactly equal to its total economic costs, including all explicit and implicit costs, the firm is said to be earning a(n) ________ profit, which corresponds to an economic profit of zero.

A firm's total revenue for the year is exactly equal to its total economic costs. Which of the following statements best analyzes the firm's situation and its likely future actions?

Evaluating a Business Venture's Success

An economist wants to determine if a firm is earning exactly a normal profit. Arrange the following steps into the correct logical sequence for this analysis.