If a firm is producing 10 pizzas, and the price of a pizza = $3.50, the AFC = $.80, and AVC = $3.00, then the firm is
A) earning a profit of $.80 per pizza
B) earning a total profit of $8.00
C) losing $.30 per pizza
D) losing a total of $6.00
E) earning a profit of $.50 per pizza

Question

Quizplus · Accepted Answer

DThe firm's total cost per pizza is the sum of AFC and AVC, which equals $3.80 ($0.80 + $3.00). Since the price of a pizza is $3.50, the firm is losing $0.30 per pizza (C). For 10 pizzas, the total loss is $3.00 per pizza times 10 pizzas, which equals $30.00, not $6.00 as stated. My previous response contained an error in calculating the total loss, which should be based on the loss per pizza, not an incorrect total.

If a Firm Is Producing 10 Pizzas, and the Price