Firms are profitable when price is:
A) greater than average cost.
B) equal to average cost.
C) less than average cost.
D) zero.

Question

Quizplus · Accepted Answer

Firms are profitable when they sell their products at a price that is greater than their average cost of production. If the price is equal to the average cost, the firm is just breaking even, and if the price is less than the average cost, the firm is operating at a loss. A price of zero would result in no revenue and therefore, no profit.

Firms Are Profitable When Price Is