If P = MC and MC ATC, then a perfectly competitive firm will earn ________ profits.
A) positive
B) zero
C) negative
D) break-even

Question

If P = MC and MC > ATC, then a perfectly competitive firm will earn ________ profits.
A) positive
B) zero
C) negative
D) break-even

Quizplus · Accepted Answer

In a perfectly competitive market, if the price (P) equals marginal cost (MC) and MC is greater than average total cost (ATC), the firm is selling its product at a price higher than the average cost of production, thus earning positive profits.

If P = MC and MC > ATC, Then a Perfectly