Assume a perfectly competitive firm is producing 300 units of output,P = $10,ATC of the 300ᵗʰ unit is $8,marginal cost of the 300ᵗʰ unit = $10,and AVC of the 300ᵗʰ unit = $6.Based on this information,the firm is:

Question

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The firm is earning an economic profit because the price ($10) is greater than the average total cost ($8) for the 300th unit. The economic profit is calculated as (P - ATC) * Q = ($10 - $8) * 300 = $2 * 300 = $600.

Assume a Perfectly Competitive Firm Is Producing 300 Units of Output,P