Scenario 14-3
Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20.
-Refer to Scenario 14-3. At Q=500, the firm's profits equal
A)$1,000.
B)$4,000.
C)$7,000.
D)$10,000.

Question

Quizplus · Accepted Answer

At Q=500, the firm's profits equal $4,000. This is because the firm's total revenue is $20*500=$10,000, and its total cost is $12*500=$6,000. Therefore, the firm's profits are $10,000-$6,000=$4,000.

Scenario 14-3 Suppose a Certain Competitive Firm Is Producing Q=500 Units of Units