Asked by Melissa Johnson on Apr 27, 2024
Verified
Refer to Table 9.1. In the long run, if cost conditions do not change, this firm will earn a zero economic profit if price is
A) $10.
B) $15.
C) $20.
D) $28.
AVC
Stands for Average Variable Cost, which is the total variable costs divided by the quantity of output produced.
- Distinguish between short-term and long-term decision-making processes for companies in perfectly competitive environments.
- Recognize the cessation threshold and analyze its effects on business functions.
Verified Answer
LK
Laura KarymeMay 02, 2024
Final Answer :
D
Explanation :
In the long run, a firm will earn zero economic profit when price equals average total cost (ATC). The lowest ATC given in the table is $28, which occurs at a quantity of 5 units.
Learning Objectives
- Distinguish between short-term and long-term decision-making processes for companies in perfectly competitive environments.
- Recognize the cessation threshold and analyze its effects on business functions.