On a short-run cost curve graph, if the market price, the marginal cost, and average total cost curve all intersect at o...
On a short-run cost curve graph, if the market price, the marginal cost, and average total cost curve all intersect at one point, then what would that mean?
Multiple Choice
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A- The business is making a high level of economic profit.
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B- The business has done an excellent job at cutting costs.
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C- The business is breaking even and the economic profit is either zero or very low.
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D- The business is ready for bankruptcy and we can definately say there is no hope for the firm to turn things around in order to become more profitable.
Homework Answers
Answer : The answer is option C.
The point where price = marginal cost = average total cost occur is called break-even point. At break-even point the economic profit is zero or very low. Therefore, option C is correct.
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