Use the figure below to answer the following questions. Figure 13.2.3 -Refer to Figure 13.2.3.Assume this firm faces demand curve D₂.At the profit-maximizing output level,the firm A)incurs an economic loss. B)makes zero economic profit. C)makes an economic profit. D)is not in a long-run equilibrium. E)is producing at its efficient scale.

Question

Quizplus · Accepted Answer

At the profit-maximizing output level, if a firm faces a demand curve that intersects its average total cost curve at its minimum point, it makes zero economic profit. This is because the price it can charge (determined by the demand curve) is equal to its average total cost at that level of output, meaning it covers all its costs, including a normal profit, but does not make an economic profit.

Use the Figure Below to Answer the Following Questions