In Figure 23.3,diagram "a" presents the cost curves that are relevant to a firm's production decision,and diagram "b" shows the market demand and supply curves for the market.Use both diagrams to answer the following question: In Figure 23.3,the price at which a firm makes zero economic profits is
A)p1.
B)p2.
C)p3.
D)p4.

Question

In Figure 23.3,diagram "a" presents the cost curves that are relevant to a firm's production decision,and diagram "b" shows the market demand and supply curves for the market.Use both diagrams to answer the following question: In Figure 23.3,the price at which a firm makes zero economic profits is
A)p1. 
B)p2. 
C)p3. 
D)p4.

Quizplus · Accepted Answer

The price at which a firm makes zero economic profits is equal to the minimum point of its average total cost curve. In diagram "a," this occurs at point Q, which corresponds to price level p3. Therefore, the answer is choice C.