-The above figure shows a perfectly competitive firm.If the market price is $10,the firm
A) is incurring an economic loss.
B) is making an economic profit.
C) is making zero economic profit.
D) will immediately shut down.
E) might shut down but more information is needed about the AVC.

Question

-The above figure shows a perfectly competitive firm.If the market price is $10,the firm
A) is incurring an economic loss. 
B) is making an economic profit. 
C) is making zero economic profit. 
D) will immediately shut down. 
E) might shut down but more information is needed about the AVC.

Quizplus · Accepted Answer

In a perfectly competitive market, if a firm's price equals its average total cost (ATC), it is making zero economic profit. This is because all costs, including opportunity costs, are covered, but there is no additional profit over and above this.

-The Above Figure Shows a Perfectly Competitive Firm