QuestionAugust 1, 2025

A perfectly competitive firm earns a profit when price is A. above minimum average total cost. B. equal to minimum average fixed costs. C. equal to minimum average total cost. D. equal to minimum average variable cost.

A perfectly competitive firm earns a profit when price is A. above minimum average total cost. B. equal to minimum average fixed costs. C. equal to minimum average total cost. D. equal to minimum average variable cost.
A perfectly competitive firm earns a profit when price is
A. above minimum average total cost.
B. equal to minimum average fixed costs.
C. equal to minimum average total cost.
D. equal to minimum average variable cost.

Solution
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Answer

A. above minimum average total cost. Explanation 1. Identify Profit Condition A perfectly competitive firm earns a profit when the price is greater than its average total cost (ATC). 2. Analyze Options Option A states that price is above minimum ATC, which aligns with the condition for earning a profit.

Explanation

1. Identify Profit Condition<br /> A perfectly competitive firm earns a profit when the price is greater than its average total cost (ATC).<br /><br />2. Analyze Options<br /> Option A states that price is above minimum ATC, which aligns with the condition for earning a profit.
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