Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price?
A)$5
B)$25
C)$50
D)$140

Question

Quizplus · Accepted Answer

The total revenue is $27 * 10 = $270. The total cost is (average fixed cost + average variable cost) * quantity = ($10 + $12) * 10 = $220. The total profit is total revenue - total cost = $270 - $220 = $50.

Suppose a Monopolist Charges a Price of $27 for Its