In the above diagram the profit maximizing firm is
A)Making positive economic profit
B)Making zero economic profit
C)Making negative economic profit
D)One cannot tell

Question

Quizplus · Accepted Answer

At the point where MC=MR, the firm is producing the output level where the marginal cost is equal to the marginal revenue. In this diagram, the point where MC=MR is also where the average total cost (ATC) is at its minimum. Hence, the firm is producing at the efficient scale and making zero economic profit. Thus, the answer is B.

In the Above Diagram the Profit Maximizing Firm Is