1. When the P > ATC at the profit maximizing quantity, the perfectly competitive firm is

A) earning an accounting profit.
B) earning an economic profit > 0.
C) has TR > TC by the greatest amount.
D) would lose profit by increasing production.
E) all of the above answers are correct.

2. Using a piece of paper in your notebook, draw side-by-side graphs for a perfectly competitive firm graph and a market (industry) graph showing the firm earning an economic profit > 0. Label the graphs correctly.

3. Using the graph you drew for Question #2, shade in the area of economic profit and plot dots to indicate the areas of TR, TC, and economic profit.