Question

If firms are earning zero economic profits, they must be producing at an output level at which Group of answer choices price equals marginal cost. price equals average total cost. price equals average variable cost. marginal revenue equals marginal cost.

Answer 1

The corporation makes no money if the price it receives forces it to produce at a level where average cost equals price, which happens at the minimum point of the AC curve.

What happens if there are no economic gains?

Normal profit is also referred to as "zero economic profit" since a business will be in a state of normal profit when its economic profit is equal to zero. When all resources are being used effectively and cannot be employed more effectively elsewhere, normal profit arises.

Why Do Competitor Companies Maintain Their Existence If They Make No Profit?

Total revenue less total costs = profit. All of the firm's opportunity expenses are included in the total cost. In the zero-profit equilibrium, the company's revenue covers the owners' time and financial outlays to maintain the operation.

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