Question

For a competitive firm supplying wheat, if the world price (P) equals the firm's min average cost (min AC), then profits will be

Answer 1

If the world price (P) equals a competitive firm's minimum average cost (min AC), the firm earns zero profits.

Step-by-step explanation:

When the world price (P) equals a competitive firm's minimum average cost (min AC), the firm earns zero profits. This occurs because the price the firm receives causes it to produce at a quantity where price equals average cost, which occurs at the minimum point of the average cost curve. Zero profits mean that the firm's total revenue is equal to its total cost, resulting in no profit or loss.