If at some output level for a firm price exceeds average total cost, then the firm is earning an economic profit.

Question

Quizplus · Accepted Answer

If price exceeds average total cost, then the firm is earning a profit that covers not only its explicit costs (such as wages and rent) but also its implicit costs (such as opportunity costs of foregone alternative uses of resources). This profit is called economic profit.

If at Some Output Level for a Firm Price Exceeds