Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity Assuming that the firm is motivated by self-interest and that the 20 units that can be produced with each technique can be sold for $2 per unit, the firm will
A) realize an economic profit of $10.
B) realize an economic profit of $4.
C) not earn any economic profit.
D) shut down rather than incur a loss by producing.

Question

Answer the question using the following data, which show all available techniques for producing 20 units of a particular commodity  Assuming that the firm is motivated by self-interest and that the 20 units that can be produced with each technique can be sold for $2 per unit, the firm will
A) realize an economic profit of $10. 
B) realize an economic profit of $4. 
C) not earn any economic profit. 
D) shut down rather than incur a loss by producing.

Quizplus · Accepted Answer

Looking at the table, we can calculate the total costs for each technique by adding the fixed costs and variable costs. We can then determine the total revenue by multiplying the price per unit by the number of units produced.

For example, using Technique A, the total cost is $30 ($20 fixed cost + $10 variable cost), and the total revenue is $40 ($2 per unit x 20 units). Therefore, the economic profit for Technique A is $10 ($40 total revenue - $30 total cost).

Similarly, we can calculate the economic profit for each technique and find that Techniques A, B, and F all result in an economic profit of $10.

Therefore, the firm should choose any of these three techniques to maximize its economic profit.

Answer the Question Using the Following Data, Which Show All