Assume a perfectly competitive firm is producing 300 units of output, P = $10, ATC of the 300^thunit is $8, marginal cost of the 300^thunit = $10, and AVC of the 300^thunit = $6. Based on this information, the firm is:

Question

Quizplus · Accepted Answer

The firm is earning an economic profit because the price ($10) is greater than the average total cost ($8) for each unit. The profit per unit is $2 ($10 - $8), and for 300 units, the total economic profit is $600 (300 units * $2 profit per unit).

Assume a Perfectly Competitive Firm Is Producing 300 Units of Output