Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves:
-Refer to Figure 14-2. If the market price is Pa, in the short run the firm will earn
A)positive economic profits.
B)negative economic profits but will try to remain open.
C)negative economic profits and will shut down.
D)zero economic profits.

Question

Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-2. If the market price is Pa, in the short run the firm will earn
A)positive economic profits. 
B)negative economic profits but will try to remain open. 
C)negative economic profits and will shut down. 
D)zero economic profits.

Quizplus · Accepted Answer

If the market price is Pa and it is above the firm's average total cost, the firm will earn positive economic profits in the short run.

Figure 14-2 Suppose a Firm Operating in a Competitive Market Has the Has