Economic profits disappear when:

Question

Quizplus · Accepted Answer

Economic profits disappear when price falls to the level of minimum average total cost. At this point, a firm is only earning enough revenue to cover all of its costs, including both fixed and variable costs. If the price falls below this level, the firm will start to incur losses. If the price is above this level, the firm will earn economic profits. Therefore, at the point where price equals minimum average total cost, economic profits disappear.

Economic Profits Disappear When