Asked by Jason Carbonetti on Jun 30, 2024
Verified
Refer to Figure 9.1. This farmer would earn a zero economic profit if price was
A) $7.
B) $9.
C) $10.
D) $11.
Economic Profit
The surplus remaining after total costs are subtracted from total revenue, considering both explicit and implicit costs.
Zero Profit
A situation where a firm's total revenues are exactly equal to its total costs, leading to no net gain or loss.
- Determine and appreciate the effects of economic earnings and deficits on business strategies.
- Differentiate between economic and normal profits in a business context.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
C
Explanation :
At a price of $10, the farmer would earn a zero economic profit because this price corresponds to the point where the average total cost curve intersects the demand curve, indicating that the price covers all the costs, including both the variable and fixed costs, leaving no economic profit.
Learning Objectives
- Determine and appreciate the effects of economic earnings and deficits on business strategies.
- Differentiate between economic and normal profits in a business context.