If firms are producing at a profit-maximizing level of output where the price is less than the average total cost:

Question

Quizplus · Accepted Answer

If the price is less than the average total cost, economic profits cannot be positive because the firm would be incurring losses. However, accounting profits may still be positive because they only take into account explicit costs and not implicit costs such as opportunity costs.

If Firms Are Producing at a Profit-Maximizing Level of Output