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=499, the firm's profits equal
A)$3,980.
B)$3,992.
C)$3,997.
D)$4,017.

Question

Quizplus · Accepted Answer

At Q=499, the firm's profits equal total revenue minus total cost. Total revenue is 499 units * $20 = $9,980. Total cost is 499 units * $12 = $5,988. Therefore, profit is $9,980 - $5,988 = $3,992.

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