Use the Figure to Answer the Following Question(s)

question 121

Multiple Choice

Use the figure to answer the following question(s) .
Figure 10-9

What is the maximum economic profit this firm depicted in Figure 10-9 will be able to earn?

• A) zero profit
• B) $200 profit
• C) $400 profit
• D) $600 profit

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Definitions:

Economic Profit

The difference between a firm’s total revenue and its opportunity costs (including both explicit and implicit).

Long-run Average Total Cost

The total cost per unit of output when all factors of production are variable, and economies of scale have been achieved.

Average Total Cost Curve

A graphical representation showing how the total cost of production per unit of output changes with the level of output.

Long-run Equilibrium

occurs when all firms in a market or industry are producing at their most efficient level, with no incentive for entry or exit, and economic forces are balanced.