A perfectly competitive firm will earn positive economic profits in the range of output for which the firm's price is ________ its minimum average total cost.
A) below
B) above
C) equal to
D) below its marginal cost and

Question

Quizplus · Accepted Answer

A perfectly competitive firm earns positive economic profits when the price at which it sells its product is above its minimum average total cost. This is because economic profit is calculated as total revenue minus total cost, where total cost includes both explicit and implicit costs. If the selling price is above the average total cost, the firm will cover all its costs and have revenue left over as profit.

A Perfectly Competitive Firm Will Earn Positive Economic Profits in the Range