Figure 14-4
Suppose a firm operating in a competitive market has the following cost curves:
-Refer to Figure 14-4. The firm will earn positive economic profits if the price is (i)
P4)
(ii)
P3)
(iii)
P2)
(iv)
P1)
A)(i) only
B)(i) or (ii) only
C)(i), (ii), or (iii) only
D)(i), (ii), (iii), and (iv)

Question

Figure 14-4
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-4. The firm will earn positive economic profits if the price is (i)
P4)
(ii)
P3)
(iii)
P2)
(iv)
P1)
A)(i) only 
B)(i) or (ii) only 
C)(i), (ii), or (iii) only 
D)(i), (ii), (iii), and (iv)

Quizplus · Accepted Answer

The firm will earn positive economic profits if the price is greater than the average total cost. In Figure 14-4, the average total cost is P2. Therefore, the firm will earn positive economic profits if the price is P3, P4, or P5.

Figure 14-4 Suppose a Firm Operating in a Competitive Market Has the Has