The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7

-If at the profit maximizing level of output, the AR curve lies below the ATC curve in the short run, the firm is earning positive economic profit.

Question

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
 
-If at the profit maximizing level of output, the AR curve lies below the ATC curve in the short run, the firm is earning positive economic profit.

Quizplus · Accepted Answer

At the profit-maximizing level of output, if the average revenue (AR) curve lies below the average total cost (ATC) curve, the firm is not covering its total costs and therefore is not earning a positive economic profit.

The Figure Given Below Shows the Aggregate Demand and Supply