Final answer:
When a firm earns zero economic profits, it means that its total revenues are equal to its total explicit and implicit costs. It has a positive accounting profit, as accounting profit does not account for implicit costs such as opportunity costs. Therefore, the firm does not need to shut down and can continue operating.
Step-by-step explanation:
When a firm earns zero economic profits, this does not necessarily mean it is making losses. Zero economic profit, also referred to as normal profit, occurs when a firm's total revenues are equal to its total costs, including both explicit and implicit costs. Implicit costs include opportunity costs, which are the earnings a firm foregoes from the next best alternative use of its resources.
Now, if we consider accounting profits, which only take into account the explicit costs, the firm would indeed have a positive accounting profit when it earns zero economic profits. That's because the implicit costs, which are counted in economic profit but not in accounting profit, are present and positive.
Hence, the correct answer to the question is: A firm that earns zero economic profits has a positive accounting profit. It does not mean the firm has to shut down, as it is still covering all its costs, including the opportunity costs, and is making sufficient revenue to sustain its business operations.