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3. MaxProfit Inc, a profit maximizing firm in a competitive market is currently producing 1000 units of widgets. It has average revenue of $100, average total cost of $80 and fixed cost of $2,000. a. What is its profit?

1 Answer

5 votes

Answer;

Total profit is $18000

Explanation:

Given in question

Number of unit is 1000

Average revenue is $100

Average total cost is $80

Fixed cost is $2000

Total revenue = average revenue
* number of unit

Total revenue = $100
* 1000=$100000

Total input cost = total cost + fixed cost

Total cost = average cost
* total unit

Total cost =$80
* 1000 = $80000

Total input cost = $80000 + $2000 = $82000

Profit = total revenue-total cost

Profit = $100000 - $82000 = $18000

Total profit is $18000

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