The correct answer is option 3: b and c

Let's analyze each statement about normal profit:

• a) The maximum level of profit that is needed to keep a firm in the existing business is defined as normal profit. This is incorrect. Normal profit is the minimum level of profit needed, not the maximum.

• b) In the long run, a firm does not produce if it earns anything less than the normal profit. This is true. In the long run, all costs are variable, and a firm must cover all its costs, including the opportunity cost of its resources (normal profit), to remain in business.

• c) In the short run, a firm may produce even if the profit is less than this level. This is true. In the short run, a firm may continue to produce as long as it covers its variable costs, even if it is not covering all its fixed costs and therefore not earning normal profit.