Question 1
Firms that are earning zero economic profits are
◦ breaking even.
◦ earning less than a normal rate of return.
◦ shutting down in the short run.
◦ shutting down in the long run.
Question 2
When a firm earns a normal rate of return, it
◦ earns a profit.
◦ breaks even.
◦ suffers a loss.
◦ should shut down.