Suits Only, a dry cleaning firm that specializes in cleaning business suits, operates in a perfectly competitive market. Robin Smith, an exceptionally talented manager, has been hired to manage Suits Only. In the dry cleaning business, a manager typically makes a salary of $400 per week. Suits Only faces the long-run average and marginal costs shown in the figure below. In long-run competitive equilibrium, the market price for cleaning a business suit is $4.50.
Given the above, the typical dry-cleaning firm has a minimum long-run average cost of cleaning a business suit equal to ________ and the typical dry cleaning firm earns economic profit equal to
________.
A. $2, $2.50 per suit cleaned
B. $3, $1.50 per suit cleaned
C. $4.50, $0
D. $2, $0
Answer: C
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