If a firm produces and sells only one unit of a good, its profit would be equal to the:
A) market price of the good.
B) revenue from the item sold minus the cost of the resources used to produce the good.
C) difference between the interest paid by the firm on its outstanding loans and the rate of depreciation.
D) sum of the price of the good and the wages paid to labor.
E) product of the wages paid to labor and the market price of the good.

Question

Quizplus · Accepted Answer

The profit of a firm is equal to its revenue minus its cost. Since the firm only produces and sells one unit of the good, its revenue will be equal to the market price of the good. However, the cost of producing the good must be subtracted from the revenue to obtain the profit. Therefore, the correct answer is B: revenue from the item sold minus the cost of the resources used to produce the good.

If a Firm Produces and Sells Only One Unit of a Good