Suppose the market price is $5, marginal cost is $4, and average total cost is $2. The perfectly competitive firm in that market is

A) earning $3 in economic profits per unit of output and is not maximizing profits.
B) earning $2 in economic profits per unit of output and is maximizing profits.
C) earning $1 in economic profits per unit of output and is not maximizing profits.
D) none of the above: Insufficient information is given.


A

Economics

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