If the price that a firm charges is higher than its _______ cost of production for that quantity produced, then the firm will earn profits.

Question

Quizplus · Accepted Answer

The correct answer is C) average. If the price that a firm charges is higher than its average cost of production for that quantity produced, then the firm will earn profits. This is because the average cost includes all costs (fixed and variable) divided by the quantity produced, and charging more than this means the firm covers all its costs and has extra revenue, which constitutes profit.

If the Price That a Firm Charges Is Higher Than