Question

Assume that marginal revenue equals rising marginal cost at 100 units of output. At this output level, a profit-maximizing firm's total fixed cost is $600 and its total variable cost is $400. If the price of the product is $10 per unit and the firm produces 100 units, the firm will earn an economic profit of Group of answer choices a)zero. b)$400. c)$100. d)$600. e)$1000.

Answer 1

economic profits = 0

so correct option is a)zero

Step-by-step explanation:

given data

output = 100 units

total fixed cost = $600

total variable cost = $400

price of product = $10 per unit

firm produces = 100 unit

to find out

firm earn an economic profit of Group

solution

we know here Total revenue is

Total revenue = 10 × 100 =$1000

and Total cost is here

Total cost = $400 + $600

Total cost = $1,000

so economic profits is express as

economic profits = revenue - cost

economic profits = 1000 - 1000

economic profits = 0

so correct option is a)zero