Asked by
amoako sampson
on Nov 04, 2024
Verified
If a perfectly competitive firm is currently producing where P = MC and MC = ATC, then the firm will earn ________ profits.
A) positive
B) zero
C) negative
D) above normal
P = MC
This equation represents the condition where the price (P) of a product equals the marginal cost (MC) of producing one additional unit, typically illustrating a firm's optimal production point in perfectly competitive markets.
MC = ATC
The condition where marginal cost equals average total cost, often used to identify the point of minimum average cost in the short run.
Zero Profits
A situation where a company's total revenues equal its total costs, meaning it is breaking even and not generating any profit.
- Recognize the situations wherein enterprises operating within perfectly competitive markets generate economic profits, whether they are none, positive, or negative.
Verified Answer
PR
Learning Objectives
- Recognize the situations wherein enterprises operating within perfectly competitive markets generate economic profits, whether they are none, positive, or negative.