Question

In short run, a competitive firm can earn only _____________.

• A. Normal profit
• B. Supernormal profit
• C. Losses
• D. Any one of the above

Answer 1

The correct option is D Any one of the above

In the short-term, it is possible for economic profits to be positive, zero, or negative. When price is greater than average total cost, the firm is making a profit. When price is less than average total cost, the firm is making a loss in the market.