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

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Quizplus · Accepted Answer

If firms are producing at a profit-maximizing level of output where the price is equal to the average total cost, it means that they have achieved zero economic profits, as their total revenue is just covering their total costs (including both explicit and implicit costs), and there is no excess revenue to generate economic profit. Also, at this level of output, the average total cost must be minimized because any deviation from this point would either increase costs or decrease revenue, reducing profits or even leading to losses. Finally, since the firms are at least covering their explicit costs, their accounting profits must be positive, although they may not be earning any economic profits. Therefore, all three statements are true in this scenario.

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