Exhibit 10-12 At the profit-maximizing (or loss-minimizing)output and price, the firm in Exhibit 10-12 would
A)be earning zero economic profit (i.e., breaking even)
B)be earning an economic profit
C)be earning an economic loss
D)be better off to shut down since total revenue does not cover fixed costs
E)have to expand to stay in business in the long run

Question

Exhibit 10-12  At the profit-maximizing (or loss-minimizing)output and price, the firm in Exhibit 10-12 would
A)be earning zero economic profit (i.e., breaking even) 
B)be earning an economic profit 
C)be earning an economic loss 
D)be better off to shut down since total revenue does not cover fixed costs 
E)have to expand to stay in business in the long run

Quizplus · Accepted Answer

At the profit-maximizing (or loss-minimizing)output and price, the firm is earning total revenue equal to total cost, which means it is breaking even and earning zero economic profit. Therefore, option A is the correct answer.

Exhibit 10-12 at the Profit-Maximizing (Or Loss-Minimizing)output and Price