Exhibit 7-3 Cost per unit curves As shown in Exhibit 7-3, the price at which the firm earns zero economic profit in the short-run is:

Question

Exhibit 7-3  Cost per unit curves  As shown in Exhibit 7-3, the price at which the firm earns zero economic profit in the short-run is:

Quizplus · Accepted Answer

The point at which the firm earns zero economic profit in the short-run is where the ATC (average total cost) curve intersects with the demand curve. From Exhibit 7-3, we can see that this intersection occurs at a price of $2.00 per unit. At any price lower than this, the firm would be making a loss, and at any price higher than this, the firm would be making a positive economic profit. Therefore, the best choice is (E) $2.00 per unit.

Exhibit 7-3 Cost Per Unit Curves as Shown in Exhibit