If profit is as high as possible and normal economic profits are being earned, which of the following is true? Choose 1 answer: (A) $PM C(Q)$ (C) $PA T C(Q)$ and $M R(Q)=M C(Q)$ (D) $P=A T C(Q)$ and $M R(Q)=M C(Q)$ (E) $PA T C(Q)$ and $M R(Q)M C(Q)$

Question

If profit is as high as possible and normal economic profits are being earned, which of the following is true? Choose 1 answer: (A) $PM C(Q)$ (C) $P>A T C(Q)$ and $M R(Q)=M C(Q)$ (D) $P=A T C(Q)$ and $M R(Q)=M C(Q)$ (E) $P>A T C(Q)$ and $M R(Q)>M C(Q)$

Accepted Answer

∻Solution∻ ‖ a ⋮ Definition of Normal Economic Profit: Normal economic profit occurs when total revenue equals total costs, including both explicit and implicit costs. This means the firm is covering all its opportunity costs and earning zero economic profit. ‖‖ b ⋮ Condition for Profit Maximization: For a firm to maximize profit, it must produce at the quantity where marginal revenue (MR) equals marginal cost (MC). ‖‖ c ⋮ Relationship Between Price and Average Total Cost: When normal economic profits are being earned, the price (P) must be equal to the average total cost (ATC). ‖‖ d ⋮ Correct Answer Analysis: Given the conditions for normal economic profit and profit maximization, the correct answer is (D) $P=A T C(Q)$ and $M R(Q)=M C(Q)$. ‖ ∻Answer∻ ⚹ (D) $P=A T C(Q)$ and $M R(Q)=M C(Q)$ ⚹ ∻Key Concept∻ ⚹ Normal Economic Profit ⚹ ∻Explanation∻ ⚹ When a firm is earning normal economic profit, it means that the firm's total revenue is equal to its total costs, including both explicit and implicit costs. This occurs when the price is equal to the average total cost (P = ATC). Additionally, for profit maximization, the firm must produce at the quantity where marginal revenue equals marginal cost (MR = MC). ⚹◊What is the relationship between economic profit, average total cost, marginal revenue, and marginal cost in a situation where profit is maximized and normal economic profits are being earned?⍭ Generate me a similar question◊

Sia