Asked by Osayama Jackie on Jul 09, 2024
Verified
Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is
A) above $13.
B) less than $13 but more than $6.
C) less than $6.
D) exactly $13.
Economic Profit
The surplus remaining when total revenue is greater than total costs, including both explicit and implicit costs.
Market Price
The price at which a good or service is offered for sale in the open market.
- Assess the economic surplus in differing market conditions.
Verified Answer
JV
Janet VirellaJul 16, 2024
Final Answer :
A
Explanation :
The firm will earn a positive economic profit in the short run if the market price is above its average total cost. Without the figure, the assumption is that $13 represents a point where price equals average total cost, so any price above $13 would result in economic profit.
Learning Objectives
- Assess the economic surplus in differing market conditions.