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Making zero economic profit

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The leader of Amazonia proposes building a tunnel through a mountainous region of the country. The tunnel will reduce travel time between two regions of Amazonia from 3 hours to just 45 minutes. Because the tunnel will reduce travel times, reduce congestion on narrow mountain roads, and stimulate economic development between the two regions, the leader argues that the tunnel is a public good. Do you agree? Using theories discussed in class, should the tunnel be considered a public good?

The AB Manufacturing Company has hired an economist to evaluate its financial situation. She explains to the board of directors that the company is making zero economic profit. Should the company go out of business?

Reference no: EM132500076

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