The graph below shows the Chamberlin model

Economics Dec 06, 2020

The graph below shows the Chamberlin model. At the profit maximizing price and output the firm is making s D (Short Run) ATC MC d 1 Quantity 0 A B C D positive economic profit. negative economic profit. zero economic profit. it is impossible to tell from the information given.

Expert Solution

As we know, a profit maximising firm will produce at that level where marginal revenue is equal to the marginal cost, therefore, we can say that the firm will produce the quantity A and at that quantity price is greater than the average total cost, therefore, we can say that the firm is making positive economic profit.

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