Which one of the following statements is true?

Correct option is A

The correct answer is (a) Pure profit is the return in excess of the opportunity cost.
Explanation
Pure profit, also known as economic profit, represents the surplus remaining after both explicit costs (out-of-pocket expenses) and implicit costs (the value of the next best alternative) are deducted from total revenue. Unlike accounting profit, it accounts for the full economic cost of doing business.
INFORMATION BOOSTER
· Economic Profit = Total Revenue - (Explicit Costs + Implicit Costs).
· Profit is maximized when Marginal Revenue (MR) = Marginal Cost (MC), not when the difference is greatest.
· Modern firms often prioritize multiple goals like wealth maximization or market share over just profit.
· Normal Profit occurs when economic profit is zero, meaning all opportunity costs are covered.
ADDITIONAL KNOWLEDGE
· (b) is incorrect because Accounting profit only deducts explicit costs; it ignores implicit costs.
· (c) is incorrect because modern firms may focus on satisficing, corporate social responsibility (CSR), or sales maximization.
· (d) is incorrect because when the difference between MR and MC is maximum, you haven't reached the optimal output level where MR = MC.