The firm will earn a positive economic profit in the short run if the market pri

Question

The firm will earn a

positive economic profit in the short run if the market price is

above / below / equal to $_________

zero economic profit in the short run if the market price is

above / below / equal to $_________

negative economic profit in the short run but remain in business if the market price

is above / below / equal to $________ & above / below / equal to $________

negative economic profit in the short run and shut down if the market price is

above / below / equal to $_________

See figure below to answer remaining questions from j through n Please circle your answer and write on the yellow cells wherever applicable. thise 13 10 MC ATC AVC 63- 45- 123 4567101 Quanti

Explanation / Answer

Answer
The firm will earn a
positive economic profit in the short run if the market price is
up to $6.3
zero economic profit in the short run if the market price is
equal to $6.3
negative economic profit in the short run but remain in business if the market price
is below to $6.3 & above to $4.5
negative economic profit in the short run and shut down if the market price is below to $4.5

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the firm is perfectly competitive firm produces at MC=P if the price is above min(AVC) and makes profit if the price is above min(ATC), and be in the business if price is between AVC and ATC but it shutdowns if the price is below min(ATC) and insecure losses equal to fixed cost.

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