If a firm is earning a positive economic profit, and it is maximizing that profit, what must be true? Choose 1 answer: (A) $PM C(Q)$ (C) $PA T C(Q)$ and $M R(Q)M C(Q)$ (D) $PA T C(Q)$ and $M R(Q)=M C(Q)$ (E) $P

Question

If a firm is earning a positive economic profit, and it is maximizing that profit, what must be 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

Accepted Answer

∻Solution∻ ‖ a ⋮ Positive Economic Profit: A firm earns a positive economic profit when its total revenue exceeds its total costs, including both explicit and implicit costs. Mathematically, this is when $P > ATC(Q)$. ‖ ‖ b ⋮ Profit Maximization: A firm maximizes profit by producing at the quantity where marginal revenue equals marginal cost, $MR(Q) = MC(Q)$. This is the profit-maximizing rule. ‖ ∻Answer∻ ⚹ (D) $P > ATC(Q)$ and $MR(Q) = MC(Q)$ ⚹ ∻Key Concept∻ ⚹ Profit Maximization and Positive Economic Profit ⚹ ∻Explanation∻ ⚹ A firm maximizes profit by producing where $MR(Q) = MC(Q)$, and it earns a positive economic profit when the price is greater than average total cost, $P > ATC(Q)$. ⚹◊What impact does a firm earning positive economic profit and maximizing that profit have on market equilibrium in macroeconomics?⍭ Generate me a similar question◊

Sia