Figure 10-15
Figure 10-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-15.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 ________.
A) P₁, Q₄
B) P₂, Q₃
C) P₂, Q₂
D) P₃, Q₂

Question

Figure 10-15
  Figure 10-15 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-15.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 ________.
A) P₁, Q₄ 
B) P₂, Q₃ 
C) P₂, Q₂ 
D) P₃, Q₂

Quizplus · Accepted Answer

A normal profit occurs where price equals average total cost (P = ATC). In the context of the options provided, P₂ is the price where the firm earns a normal profit, and Q₃ is the corresponding output level.

Figure 10-15 Figure 10-15 Shows the Cost and Demand Curves