Which of the following best characterizes abnormal profits in the short run for a firm?

Abnormal profits, also known as economic profits, occur when a firm’s total revenue exceeds its total costs, including both explicit and implicit costs. In the short run, firms may earn higher than normal profits, especially if they are operating in a market structure that allows for price-setting or if they possess some form of competitive advantage, such as unique products or lower production costs.

This situation is commonly observed when a firm experiences a sudden increase in demand or has successfully differentiated its products. These higher than normal profits are typically unsustainable in the long run as new entrants may join the market, increasing competition and driving profits back toward normal levels.

In contrast, zero economic profit describes a situation where total revenue equals total costs (including opportunity costs), which does not characterize abnormal profits. Similarly, profits equal to opportunity costs indicate the firm is breaking even but not earning any extra profit beyond the minimum necessary to keep the business running. Losses incurred would reflect a negative profit scenario, which is the opposite of abnormal profits. Hence, the correct answer captures the essence of a situation where a firm is earning more than it typically would in a competitive market.