Refer to the accompanying graph. If this firm is a price taker and the price of each unit of output is $15, then at this firm's profit-maximizing level of output, it will earn a ________ of ________.

A)loss; $60
B)profit; $180
C)loss; $300
D)loss; $900

Question

Refer to the accompanying graph. If this firm is a price taker and the price of each unit of output is $15, then at this firm's profit-maximizing level of output, it will earn a ________ of ________.

A)loss; $60 
B)profit; $180 
C)loss; $300 
D)loss; $900

Quizplus · Accepted Answer

Profit = total revenue (TR)− total cost (TC). When P = $15, TR = P × Q = $15 × 60 = $900, and TC = ATC × Q = $16 × 60 = $9,600. Thus, the firm's loss is = $60 ($900 − $960 = −$60).

Refer to the Accompanying Graph