In the short run, a perfectly competitive ﬁrm maximizes proﬁts by producing 500 units of output at a price of £10 per unit and an average cost of £8 per unit. What is the total proﬁt earned by the ﬁrm?
A) £400
B) £2
C) £1000
D) £5000

Question

Quizplus · Accepted Answer

Total profit is calculated as (Price - Average Cost) x Quantity. Here, it is (£10 - £8) x 500 = £1000.

In the Short Run, a Perfectly Competitive ﬁRm Maximizes Proﬁts