If the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52,then the firm
A) incurs an economic loss of $2 per unit.
B) makes an economic profit of $2 per unit.
C) makes zero economic profit.
D) incurs a total economic loss of $52.
E) More information is needed to determine the firm's economic profit or loss per unit.

Question

Quizplus · Accepted Answer

The firm's average total cost of $52 is greater than the market price of $50, indicating that the firm is not covering all of its costs from sales revenue alone. Thus, the firm incurs an economic loss of $2 per unit.

If the Market Price Is $50 Per Unit for a Good