-Refer to Figure 9 -6. The firm represented in the diagram makes
A) should exit the industry.
B) makes zero accounting profit.
C) should expand its output to take advantage of economies of scale.
D) makes zero economic profit.

Question

-Refer to Figure 9 -6. The firm represented in the diagram makes
A) should exit the industry. 
B) makes zero accounting profit. 
C) should expand its output to take advantage of economies of scale. 
D) makes zero economic profit.

Quizplus · Accepted Answer

The firm makes zero economic profit when total revenue equals total cost, including both explicit and implicit costs. In the context of the diagram (which isn't visible here but typically represents a firm's cost and revenue structure), if a firm is covering all its costs (including opportunity costs), it's making zero economic profit, which is a normal condition for a perfectly competitive firm in the long run.