The figure above illustrates a firm's demand and marginal revenue curves and its cost curves.
-If the firm in the figure above attempted to minimize its average total cost by producing 100 pairs of Tommy jeans per day at an average total cost of $20 per pair and it sold those jeans for $80 per pair,the firm would ________.

Question

Quizplus · Accepted Answer

Producing at a lower average total cost (ATC) than the selling price leads to economic profit. If producing 100 jeans has a higher ATC than producing 125, the firm makes less profit at 100 jeans than it would at 125, assuming the selling price remains constant.

The Figure Above Illustrates a Firm's Demand and Marginal Revenue