Exhibit 8-3 Cost per unit curves
-As shown in Exhibit 8-3, the price at which the firm earns zero economic profit in the short-run is:

Question

Exhibit 8-3 Cost per unit curves 
-As shown in Exhibit 8-3, the price at which the firm earns zero economic profit in the short-run is:

Quizplus · Accepted Answer

The point at which the firm earns zero economic profit in the short-run is the point of intersection between the average total cost (ATC) curve and the demand curve. In this case, that intersection occurs at a price of $2.00 per unit, as shown by the vertical line on the graph. At this price, the firm is able to cover all of its variable costs and some of its fixed costs, but it is not earning any profit. Any price below $2.00 per unit would result in a loss, while any price above $2.00 per unit would result in a profit. Therefore, the best choice is E, $2.00 per unit.

Exhibit 8-3 Cost Per Unit Curves