Question

The producer of a downloadable antivirus software program spends exactly ​$2 comma 650 comma 000 producing the first copy and incurring various costs required to make the software​"user-friendly." The firm can produce and distribute additional copies at a​ per-unit cost of ​$1.00. If the company sold as many copies as consumers wished to purchase at a price of ​$1.00 per​copy, it would sell 425 comma 000 copies. If the company maximizes its economic profits in the​ short-run, it sells 225 comma 000 copies at a price of ​$40. ​Finally, the company earns zero economic profits when it sells 275 comma 000 copies.What are the​ firm's economic profits​ (or losses) if it sells 425 comma 000 copies of the antivirus software program at a ​$1.00 price per​ copy? ​$ -2,650,000 .What are the maximum economic profits that the firm can earn in the short​ run? ​$ 6,125,000 . What is marginal revenue when the firm maximizes its​ short-run economic​ profits? ​$ 1.00 .In the long​ run, after entry of competing​ firms, to the nearest​ dollar, and including the correct​ sign, what amount of economic profits will this firm​ earn? ​$ 0 0.

Answer 1

What are the​ firm's economic profits​ (or losses) if it sells 425 comma 000 copies of the antivirus software program at a ​$1.00 price per​ copy? ​

• economic profit = revenue - total costs = $425,000 - $3,075,000 = ($2,650,000)

What are the maximum economic profits that the firm can earn in the short​ run? ​

• maximum economic profit = (225,000 x $40) - $2,875,000 = $6,125,000

What is marginal revenue when the firm maximizes its​ short-run economic​ profits? ​

• $40

Marginal revenue refers to the revenue generated by selling 1 more unit.

In the long​ run, after entry of competing​ firms, to the nearest​ dollar, and including the correct​ sign, what amount of economic profits will this firm​ earn? ​

• $0

On the long run, economic profit will always = 0

Step-by-step explanation:

price per copy units sold total revenue

$1 425,000 $425,000

$40 225,000 $9,000,000

total cost to produce and sell 425,000 copies = (425,000 x $1) + $2,650,000 = $3,075,000

total cost to produce and sell 275,000 copies = (275,000 x $1) + $2,650,000 = $2,925,000

total cost to produce and sell 225,000 copies = (225,000 x $1) + $2,650,000 = $2,875,000