Question

2. The PPS Company sells lead pencils in a perfectly competitive market for $5 per box of a dozen pencils. The firm currently produces 2,500 boxes of lead pencils each week and average total cost at this level of production is $5.15. What level of profit is this firm earning? Explain

Answer 1

Gross profit= -375

Step-by-step explanation:

Giving the following information:

The PPS Company sells lead pencils in a perfectly competitive market for $5 per box of a dozen pencils. The firm currently produces 2,500 boxes of lead pencils each week and the average total cost at this level of production is $5.15.

Sales= 2,500*5= $12,500

Cost of goods sold= 2,500*5.15= $12,875

Gross profit= -375