Assume a perfectly competitive firm is producing 500 units of output,P = $7,ATC of the 500ᵗʰ unit is $6,marginal cost of the 500ᵗʰ unit = $7,and AVC of the 500ᵗʰ unit = $5.Based on this information,the firm is:
A) earning an economic profit of $500.
B) earning an economic profit of $1,000.
C) incurring a loss of $500.
D) incurring a loss of $1,000.
Correct Answer:
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