Refer to the data provided in Table 9.3 below to answer the following question(s).
Table 9.3
$$\begin{array} { c c c c c c c }
\text { q } & \text { TFC } & \text { TVC } & \text { TC } & \text { MC } & \text { AVC } & \text { ATC } \
\hline 0 & \$ 100 & \$ 0 & \$ 100 & - - & - - & - - \
\hline 1 & 100 & 40 & 140 & 40 & 40 & 140 \
\hline 2 & 100 & 60 & 160 & 20 & 30 & 80 \
\hline 3 & 100 & 90 & 190 & 30 & 30 & 63.33 \
\hline 4 & 100 & 124 & 224 & 34 & 31 & 56 \
\hline 5 & 100 & 180 & 280 & 56 & 36 & 56 \
\hline 6 & 100 & 264 & 364 & 84 & 44 & 60.67 \
\hline 7 & 100 & 372 & 472 & 108 & & 67.43 \
\hline
\end{array}$$
-Refer to Table 9.3. In the long run, if cost conditions do not change, this firm will earn a zero economic profit if price is
A) $20.
B) $30.
C) $40.
D) $56.

Question

Refer to the data provided in Table 9.3 below to answer the following question(s).
Table 9.3
 $$\begin{array} { c c c c c c c } 
\text { q } & \text { TFC } & \text { TVC } & \text { TC } & \text { MC } & \text { AVC } & \text { ATC } \
\hline 0 & \$ 100 & \$ 0 & \$ 100 & - - & - - & - - \
\hline 1 & 100 & 40 & 140 & 40 & 40 & 140 \
\hline 2 & 100 & 60 & 160 & 20 & 30 & 80 \
\hline 3 & 100 & 90 & 190 & 30 & 30 & 63.33 \
\hline 4 & 100 & 124 & 224 & 34 & 31 & 56 \
\hline 5 & 100 & 180 & 280 & 56 & 36 & 56 \
\hline 6 & 100 & 264 & 364 & 84 & 44 & 60.67 \
\hline 7 & 100 & 372 & 472 & 108 & & 67.43 \
\hline
\end{array}$$
-Refer to Table 9.3. In the long run, if cost conditions do not change, this firm will earn a zero economic profit if price is
A) $20.
B) $30.
C) $40.
D) $56.

Quizplus · Accepted Answer

In the long run, firms in perfectly competitive markets will adjust their output so that price equals the minimum of average total cost (ATC). The lowest ATC given in the table is $56 at an output level of 5 units. Therefore, at a price of $56, the firm will cover all its costs, including the opportunity cost of capital (implied in economic profit), resulting in a zero economic profit.

Refer to the Data Provided in Table 9 -Refer to Table 9