In the short run, a purely competitive firm will always make an economic profit if
A)P = ATC.
B)P AVC.
C)P = MC.
D)P ATC.

Question

In the short run, a purely competitive firm will always make an economic profit if
A)P = ATC.
B)P > AVC.
C)P = MC.
D)P > ATC.

Quizplus · Accepted Answer

In the short run, a purely competitive firm will make an economic profit if the price (P) it receives for its product is greater than its average total cost (ATC) of production. This is because economic profit is calculated as total revenue minus total costs, and if the price per unit exceeds the cost per unit, the firm will earn a profit.

In the Short Run, a Purely Competitive Firm Will Always