If a perfectly competitive firm is producing an output at which price is equal to minimum average total cost,the firm

Question

Quizplus · Accepted Answer

When a perfectly competitive firm is producing an output at which price is equal to minimum average total cost, the firm is breaking even, which means it is neither making a profit nor incurring a loss. The firm is producing its profit-maximizing quantity, as it is producing at the point where marginal cost equals price. Therefore, the correct choice is B, and the firm is not making an economic profit or incurring an economic loss.

If a Perfectly Competitive Firm Is Producing an Output at Which