Final answer:
The firm is making an economic profit since its total revenue exceeds its total costs. The profit is calculated as $64,970 - $60,286.40, amounting to $4,683.60.
Step-by-step explanation:
If a firm has total revenue of $64,970 when it sells 3560 units of output and the average cost is $16.94, we can determine if the firm is making an economic profit or loss by comparing total revenues to total costs. The total costs can be calculated by multiplying the average cost by the number of units sold, which is $16.94 × 3560 units = $60,286.40. By comparing the total revenue and total costs, we find that the firm's total revenue ($64,970) is higher than its total costs ($60,286.40), which means the firm is making a profit. The amount of profit is determined by subtracting total costs from total revenues, which is $64,970 - $60,286.40 = $4,683.60.