The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 9.3
- Refer to Figure 9.3 and identify the price level at which the firm earns only normal profit.

Question

The figure given below shows the revenue and the cost curves of a perfectly competitive firm. Figure 9.3 
- Refer to Figure 9.3 and identify the price level at which the firm earns only normal profit.

Quizplus · Accepted Answer

The normal profit or zero economic profit is when the total cost (TC) equals total revenue (TR). From the graph, the point where the TR curve intersects the TC curve is at a price of $10. At this price level, the quantity sold is 12 units (where MC=MR), and the ATC curve intersects at the minimum point of the curve, indicating that the firm is earning only normal profit. Thus, the correct answer is (C) $10.

The Figure Given Below Shows the Revenue and the Cost