A perfectly competitive firm's profit per unit of output equals

Question

Quizplus · Accepted Answer

In perfect competition, firms are price takers, meaning they cannot influence the market price. Therefore, the profit per unit of output is equal to the difference between the market price and the average total cost (ATC) of producing each unit. This is because ATC includes both fixed and variable costs, so if the price is higher than the ATC, the firm is earning a profit. Thus, the correct answer is E: price minus average total cost.

A Perfectly Competitive Firm's Profit Per Unit of Output Equals