The following figure shows equilibrium at the industry and firm level. Figure 9.6 In the figure,
S₁, S₂, S₃are the market supply curves.
D₁ and D₂ are the market demand curves.
MC is the marginal cost curve of the firm.
MR₁ and MR₂are the marginal revenue curves of the firm.
ATC is the average-total-cost curve of the firm.
According to Figure 9.6, at a price of $1, the firm would earn an economic profit of:

Question

The following figure shows equilibrium at the industry and firm level. Figure 9.6

In the figure,
S₁, S₂, S₃are the market supply curves.
D₁ and D₂ are the market demand curves.
MC is the marginal cost curve of the firm.
MR₁ and MR₂are the marginal revenue curves of the firm.
ATC is the average-total-cost curve of the firm.
According to Figure 9.6, at a price of $1, the firm would earn an economic profit of:

Quizplus · Accepted Answer

At a price of $1, the firm would be earning a revenue of $1 from selling one unit of output. However, the firm's average total cost (ATC) at that level of output is above $1, which means that the firm is incurring a loss on each unit sold. Therefore, the economic profit at a price of $1 would be zero, as the revenue earned would only cover the cost of producing the output.

The Following Figure Shows Equilibrium at the Industry and Firm