Figure 15-19 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 15-19. If the government regulates Erickson Power Company so that the firm can earn a normal profit, the price would be set at ________ and the output level is ________.

Question

Quizplus · Accepted Answer

A normal profit occurs where price equals average total cost. In the context of the figure, this would be at price P2 and output level Q3, where the firm covers all its costs, including opportunity costs, but does not earn an economic profit.

Figure 15-19 Shows the Cost and Demand Curves for the Erickson