46.6k views
3 votes
For a perfectly competitive sugar producer in Haiti, a short - run economic profit will occur if the price of each ton of sugar sold is

A. greater than the average total cost of producing sugar.
B. equal to the average total cost of producing sugar.
C. greater than the marginal revenue of each ton of sugar.
D. rising as more sugar is sold.
E. less than the average total cost of producing sugar.

User Saar
by
8.4k points

1 Answer

6 votes

Final answer:

A short-run economic profit for a perfectly competitive sugar producer occurs when the sale price per ton exceeds the average total cost of production, resulting in positive profit margins. Option A is correct.

Step-by-step explanation:

For a perfectly competitive sugar producer in Haiti, a short-run economic profit will occur if the price of each ton of sugar sold is greater than the average total cost of producing sugar.

This is because in a perfectly competitive market, a firm maximizes its profits by producing at the quantity of output where price (P) equals marginal cost (MC).

However, whether this results in an actual economic profit depends on the relationship between the market price and the average total cost (average total cost curve). If the market price exceeds the average cost of production, the firm realizes a profit.

Conversely, if the market price is below the average total cost, the firm will incur losses, although it may continue to produce for a while if fixed costs are already paid and shutting down immediately isn't economically justified.

User Mike Sand
by
8.2k points