To the right is a graph for a firm earning exactly zero profit. Total revenue = P* x Q* and total cost = Q* x ATC, and since P* = ATC these must be the same areas; illustrated by the shaded area.

   Remember that our definition of profit or economic profit means that the owner(s) of this firm are earning a salary equal to what they would earn in their next best alternative, and investors are earning the same interest or rate of return on their investment that they would earn in the best alternative investment. Zero profit, while not exciting, will not induce firms to exit the industry.

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