-Refer to the graph above.If regulators set price at marginal cost,this firm would earn
A) economic losses,forcing it to shut down in the long run.
B) the same amount of profit it would earn without regulation.
C) zero economic profit.
D) a positive economic profit,though not as much as the profit it would earn without regulation.
E) economic losses,though not as much as without regulation.

Question

-Refer to the graph above.If regulators set price at marginal cost,this firm would earn
A) economic losses,forcing it to shut down in the long run. 
B) the same amount of profit it would earn without regulation. 
C) zero economic profit. 
D) a positive economic profit,though not as much as the profit it would earn without regulation. 
E) economic losses,though not as much as without regulation.

Quizplus · Accepted Answer

Price is set at marginal cost, so the firm will produce at the point where marginal cost equals price. At this point, the firm will be earning zero economic profit.

-Refer to the Graph Above