Question

Consider a firm operating in a competitive market. The firm is producing 40 units of output, has an average total cost of production equal to $6, and is earning $240 economic profit in the short run. What is the current market price?

Answer 1

Current market price is $12

Step-by-step explanation:

Total cost of production of 40 units output is 40×$6=$240

Profit=Total sales - total cost

Total sales= profit+total cost= $240+$240= $480

Market price=$480/40=$12