Use the following to answer question(s):
Exhibit: A Perfectly Competitive Firm in the Short Run

-(Exhibit: A Perfectly Competitive Firm in the Short Run) The lowest price that will yield zero economic profits is indicated by the distance:

Question

Use the following to answer question(s): 
Exhibit: A Perfectly Competitive Firm in the Short Run
 
-(Exhibit: A Perfectly Competitive Firm in the Short Run) The lowest price that will yield zero economic profits is indicated by the distance:

Quizplus · Accepted Answer

At point E, the firm is able to cover its variable costs but not its fixed costs, resulting in zero economic profits. This is the lowest price that allows the firm to continue operating in the short run. Prices below 0E would result in shutting down operations as the firm would not even be able to cover its variable costs. Prices above 0E would result in positive economic profits.

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