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Figure: The Profit-Maximizing Output and Price
-(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.At the profit-maximizing output and price for a perfectly competitive industry,economic profit for the firms in the industry is:
A)$0.
B)$200.
C)$1,600.
D)$3,200.

Question

Use the following to answer question:
Figure: The Profit-Maximizing Output and Price 
-(Figure: The Profit-Maximizing Output and Price)Use Figure: The Profit-Maximizing Output and Price.Assume that there are no fixed costs and AC = MC = $200.At the profit-maximizing output and price for a perfectly competitive industry,economic profit for the firms in the industry is:
A)$0. 
B)$200. 
C)$1,600. 
D)$3,200.

Quizplus · Accepted Answer

At the profit-maximizing output and price, the average cost and marginal cost are both equal to $200. Therefore, the price equals the average cost, meaning that economic profit is zero.

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