In the short run, a purely competitive firm will earn a normal profit when
A)P = AVC.
B)P MC.
C)that firm's MR = market equilibrium price.
D)P = ATC.

Question

In the short run, a purely competitive firm will earn a normal profit when
A)P = AVC.
B)P > MC.
C)that firm's MR = market equilibrium price.
D)P = ATC.

Quizplus · Accepted Answer

In the short run, a purely competitive firm earns a normal profit when the price (P) is equal to the average total cost (ATC). This means the firm is covering all its costs, including a normal return on investment.

In the Short Run, a Purely Competitive Firm Will Earn