Economic profit maximization
A. Graph the profit maximization for a perfectly competitive firm. Show equilibrium profit and quantity.
B. Show and explain the situation in which a profit maximizing, perfectly competitive firm is earning a positive economic profit. Be sure to label the profit maximizing level of output and shade in the area that represents profit.
C. Show and explain the situation in which a profit maximizing, perfectly competitive firm is earning a negative profit and chooses to continue to produce in the short-run.
D. Show and explain how B would change if the firm chose to shut down.
