FIGURE 9-1
-Refer to Figure 9-1. The diagram shows cost curves for a perfectly competitive firm. The price at which the firm earns zero economic profits is

Question

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At price P3, the firm is producing output where the marginal cost equals the marginal revenue. This is the profit-maximizing level of output for the firm in a perfectly competitive market. At this level of output, the firm is earning zero economic profits, as the total revenue is equal to the total cost. Prices below P3 will result in negative economic profits, while prices above P3 will result in positive economic profits.

FIGURE 9-1 -Refer to Figure 9-1. the Diagram Shows Cost Curves for Curves