Question

Given the information below, the economic profit of a

firm is __________.
a.product price: $35
b.unit cost: $5
c.quantity sold: 100
d.quantity produced: 100
e.opportunity cost: $750

Answer 1

Given the product price, unit cost, quantity sold, quantity produced, and opportunity cost, the economic profit of the firm is calculated to be $2250.

Step-by-step explanation:

Considering the information provided, the economic profit of the firm can be calculated by first determining total revenues and then subtracting total costs and opportunity costs from these revenues. The total revenues are calculated by multiplying the product price by the quantity sold, which is $35 times 100, resulting in $3500. The total costs are the unit costs multiplied by the quantity produced, which is $5 times 100, yielding $500. Lastly, we subtract the opportunity cost which is given as $750.

The formula for economic profit is:

Economic Profit = Total Revenue - (Total Cost + Opportunity Cost)

Plugging in the values from the question:

Economic Profit = $3500 - ($500 + $750)

Economic Profit = $3500 - $1250

Economic Profit = $2250

Thus, given the information, the economic profit of the firm is $2250.