Consider the following short- run cost curves for a perfectly competitive firm. 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
A) P3.
B) P2.
C) P5.
D) P1.
E) P4.

Question

Consider the following short- run cost curves for a perfectly competitive firm.  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
A) P3. 
B) P2. 
C) P5. 
D) P1. 
E) P4.

Quizplus · Accepted Answer

The firm earns zero economic profits when the price is equal to the minimum of the average total cost curve, which is P3 in this case.

Consider the Following Short- Run Cost Curves for a Perfectly