A firm currently produces 500 units at a price of $10. If it earns $500 profit,...

A firm currently produces 500 units at a price of $10. If it earns $500 profit, what must the average cost be? Note: The formula for Profit = Quantity × (Price − Average Cost)c

Expert Solution

Answer :

The formula for profit() = Q×(P-ATC), where,

= $500

P = $10

ATC =?

500 = 500×(10-ATC)

1 = 10-ATC

ATC = $9

Thus, the average cost should be $9

Rahul Sunny answered 2 years ago

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