If price equals average total cost at the profit-maximizing output level,then in the short run,

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Quizplus · Accepted Answer

If price equals average total cost at the profit-maximizing output level, it means that the firm is earning only enough revenue to cover all of its costs, including both variable and fixed costs. Therefore, it is not earning any economic profit, but it is also not incurring any losses. In other words, it is earning zero profit. This is the break-even point for the firm in the short run.

If Price Equals Average Total Cost at the Profit-Maximizing Output