Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Surplus
B
Deficit
C
Equilibrium
D
Excess revenue
Understanding the Answer
Let's break down why this is correct
Answer
Normal profit is the minimum amount of profit a firm needs to make to stay in business. It covers all the costs, including the opportunity cost of the owner's time and investment. This is similar to how a balanced budget for a government means that its spending equals its income, ensuring financial stability. Just as a firm aims to achieve at least normal profit to survive, a government aims for a balanced budget to avoid debt. Therefore, if we think of the relationship as A:B, we can say that normal profit is to a firm as a balanced budget is to a government, which leads us to conclude that the answer is economic stability.
Detailed Explanation
Normal profit means a firm is covering all its costs and making just enough to stay in business. Other options are incorrect because A surplus means earning more than spending; A deficit means spending more than earning.
Key Concepts
Normal Profit
Balanced Budget
Economic Efficiency
Topic
Normal Profit and Market Dynamics
Difficulty
easy level question
Cognitive Level
understand
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