Refer to the accompanying figure. If the market for doughnuts is perfectly competitive, and the price of a doughnut is 10 cents, then this firm:

Question

Quizplus · Accepted Answer

At a price of 10 cents, the firm should produce 50 doughnuts per day because, at that quantity, marginal cost equals 10 cents.  Since average total cost is also 10 cents when the firm produces 50 doughnuts a day, this firm's economic profit would be zero.

Refer to the Accompanying Figure