In the short run, a perfectly competitive firm will make an economic profit as long as

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In the short run, a perfectly competitive firm will make an economic profit as long as the price (P) is greater than average total cost (ATC). This is because economic profit is calculated by subtracting total costs (including both fixed and variable costs) from total revenue, and total revenue is price times quantity. If the price is higher than the average total cost, the firm will earn more revenue per unit than it costs to produce each unit, leading to an economic profit.

In the Short Run, a Perfectly Competitive Firm Will Make