Figure 10-9 Figure 10-9 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-9.If the government regulates Erickson Power Company so that the firm can earn a normal profit,the price would be set at ________ and the output level is ________.

Question

Figure 10-9  Figure 10-9 shows the cost and demand curves for the Erickson Power Company.
-Refer to Figure 10-9.If the government regulates Erickson Power Company so that the firm can earn a normal profit,the price would be set at ________ and the output level is ________.

Quizplus · Accepted Answer

To earn a normal profit, the price should be set at the point where the average total cost curve (ATC) intersects the demand curve (D). This occurs at point U1B12. The corresponding output level is Q₃, which is where the quantity demanded equals the quantity supplied at that price. Therefore, the answer is P₂, Q₃.

Figure 10-9 Figure 10-9 Shows the Cost and Demand