Use the following scenario to answer the following questions:
Chuck Diesel Burger is a food truck in Houston,Texas.Imagine that Chuck Diesel Burger's minimum average total cost (ATC)is $3.75 and that its minimum average variable cost (AVC)is $2.50.Assume there are no barriers to entrer into or exit from the food-truck market.
-Chuck Diesel Burger will make a positive economic profit if the price is equal to
A) $4.00.
B) $3.75.
C) $3.00.
D) $2.50.
E) $2.00.

Question

Quizplus · Accepted Answer

In order to make economic profit, the price must exceed the minimum average total cost (ATC). Since the minimum ATC for Chuck Diesel Burger is $3.75, a price of $4.00 would allow for a positive economic profit. Any price below $3.75 but above the minimum average variable cost (AVC) of $2.50 would allow for revenue to cover variable costs, but not fixed costs, resulting in a loss. Therefore, the best choice is A) $4.00.

Use the Following Scenario to Answer the Following Questions