-The figure above illustrates the short- run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces _______ frames each week, makes _______ of total revenue, and makes zero profit.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms make zero economic profit in the long run. Since the market price is $30 per frame and Paul makes zero profit at this price, he must be operating where price equals average total cost. The correct choice involves producing 300 frames (which matches the quantity where price equals average total cost in the scenario described) and making $9,000 in total revenue ($30 per frame times 300 frames), indicating zero economic profit.

-The Figure Above Illustrates the Short- Run Costs of Paul's