when economic profit is zero MC=MR=AVC, or MC=MR=ATC, which one is right?
got it, 3x
and the price of shutdown point should be lower than that of break-even point, right?
-Economic Profit= Total revenue-Total Cost When you take the derivative and equal it to zero to find the maximum economic profit, you find : MC=MR. Here, the economic profit is not zero, its derivative is zero. -Economic Profit= Total revenue-Total cost = Q*(Price-ATC) So, the economic profit is zero when price = ATC. For perfect competition, price curve, which is also demand curve (MB), is equal to MR. So, economic profit is zero when MR=MC=ATC. But for monopoly, this equation no longer holds since MB is not equal to MR anymore.