Narrbegin Exhibit 7.2 Cost per unit curves
-As shown in Exhibit 7.2, the price at which the firm earns zero economic profit in the short run is:
A) $1 per unit.
B) $1.50 per unit.
C) $4 per unit.
D) $2 per unit.

Question

Narrbegin Exhibit 7.2 Cost per unit curves  
-As shown in Exhibit 7.2, the price at which the firm earns zero economic profit in the short run is:
A) $1 per unit. 
B) $1.50 per unit. 
C) $4 per unit. 
D) $2 per unit.

Quizplus · Accepted Answer

The point where the average total cost (ATC) curve intersects the demand curve represents the price at which the firm earns zero economic profit in the short run. In Exhibit 7.2, this occurs at a price of $2 per unit, which is the intersection point of the ATC curve and the demand curve. Therefore, choice D is the correct answer.