Figure 14-1
Suppose that a firm in a competitive market has the following cost curves:
-Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is
A)above $6.30.
B)less than $6.30 but more than $4.50.
C)less than $4.50.
D)exactly $6.30.

Question

Figure 14-1
Suppose that a firm in a competitive market has the following cost curves: 
-Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is
A)above $6.30. 
B)less than $6.30 but more than $4.50. 
C)less than $4.50. 
D)exactly $6.30.

Quizplus · Accepted Answer

A firm earns a positive economic profit in the short run if the market price is above its average total cost. If the price is above $6.30, it indicates that the price is higher than the average total cost, leading to a positive economic profit.

Figure 14-1 Suppose That a Firm in a Competitive Market Has the Has