Final answer:
At a quantity of 40, the firm's total revenue is $640 and its total cost is $580, so profits are $60.
Step-by-step explanation:
Once the firm has chosen price and quantity, it's in a position to calculate total revenue, total cost, and profit.
At a quantity of 40, the price of $16 lies above the average cost curve, so the firm is making economic profits.
From Table 10.1 we can see that, at an output of 40, the firm's total revenue is $640 and its total cost is $580, so profits are $60. In Figure 10.3, the firm's total revenues are the rectangle with the quantity of 40 on the horizontal axis and the price of $16 on the vertical axis.
The firm's total costs are the light shaded rectangle with the same quantity of 40 on the horizontal axis but the average cost of $14.50 on the vertical axis. Profits are total revenues minus total costs, which is the shaded area above the average cost curve.