In the short run, if a perfectly competitive firm is producing at a price below average total cost, its economic profit is:
A) positive.
B) zero.
C) negative.
D) normal.

Question

Quizplus · Accepted Answer

In the short run, if a perfectly competitive firm is producing at a price below its average total cost, it means that the revenue it generates per unit is less than the cost per unit. Therefore, the firm is not covering its total costs, leading to negative economic profits.

In the Short Run, If a Perfectly Competitive Firm Is