Question

Consider a firm that employs some resources that are owned by the firm. When accounting profit is zero, economic profit Multiple Choice must also equal zero. is sure to be positive. must be negative and shareholder wealth is reduced. cannot be computed accurately, but the firm is breaking even nonetheless.

Answer 1

must be negative and shareholder wealth is reduced

Step-by-step explanation:

In terms of economic benefit, the "breaking even though" can not be accurate, since economic profit looks for certain options for capital. There is no guarantee that the resources can not be distributed to any other attempt to achieve positive accounting benefits.

So, the right option is must be negative and shareholder wealth is reduced.