When economic profits exist in the market for a particular product,this is a signal to producers that
A)Consumers would like more scarce resources devoted to the production of this product.
B)The market is oversupplied with this product.
C)The best mix of goods and services is being produced with society's scarce resources.
D)Price is at the minimum of the ATC curve.

Question

Quizplus · Accepted Answer

Economic profits indicate that there is high demand for a particular product, which means that consumers are willing to pay a premium price for it. As a result, producers receive a signal that they should allocate more scarce resources towards the production of this product in order to maximize their profits. This, in turn, increases the supply of the product in the market, making it more readily available to consumers.

When Economic Profits Exist in the Market for a Particular