The figure given below shows the revenue and the cost curves of a perfectly competitive firm.Figure 10.3

-Refer to Figure 10.3 and identify the price level at which the firm earns normal profit.

Question

The figure given below shows the revenue and the cost curves of a perfectly competitive firm.Figure 10.3
 
-Refer to Figure 10.3 and identify the price level at which the firm earns normal profit.

Quizplus · Accepted Answer

Normal profit is earned when the average total cost curve intersects with the demand curve at the point where price is equal to average total cost. In the given figure, we can see that the average total cost curve (ATC) intersects with the demand curve at a price of $10 per unit. This is the point where the firm is earning normal profit. Therefore, the answer is C) $10.

The Figure Given Below Shows the Revenue and the Cost