Suppose Crusaders Corn is a company in a competitive industry of corn production. If it currently...

Suppose Crusaders Corn is a company in a competitive industry of corn production. If it currently produces 500 bushels of corn, its average total cost at 500 output is $4 per bushel, and the market price is $5 per bushel. Its profit is

	a.	$500.
	b.	$4,500.
	c.	−$2,000.
	d.	$2,500.

Expert Solution

Ans

Formula

profit (π) = Total Revenue (TR) - Total cost (TC)

In this

TR = outputs × Market Price = 500 × 5 = 2500

TC = Output × Averages Total Cost = 500 × 4 = 2000

So

Profits = TR - TC = 2500 - 2000 = 500

Hence option a) $500 right.

Rahul Sunny answered 3 years ago

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