When a firm's demand curve is tangent to its average total cost curve, the
A)firm's economic profit is zero.
B)firm must be earning economic profits.
C)firm must be incurring economic losses.
D)firm must be operating at its efficient scale.

Question

Quizplus · Accepted Answer

When a firm's demand curve is tangent to its average total cost curve, it means that the price equals the average total cost, resulting in zero economic profit.

When a Firm's Demand Curve Is Tangent to Its Average