If an individual monopolistically competitive seller's demand curve lies above its average total cost curve, the firm is:
A) breaking even.
B) earning an economic profit.
C) earning only a normal profit.
D) covering its explicit costs but not its implicit costs.

Question

Quizplus · Accepted Answer

When a firm's demand curve lies above its average total cost curve, it means that the price it can charge for its product is higher than the average cost of producing that product, leading to economic profit.

If an Individual Monopolistically Competitive Seller's Demand Curve Lies Above