Question

In: Economics

Suppose the price of a good is $100.  Suppose when a particular firm producing this good produces...

Suppose the price of a good is $100.  Suppose when a particular firm producing this good produces 1000 units a week, its average cost is $90.  This firm operates in a competitive market and therefore, can sell whatever quantity it wants to sell at this price.  What profit would this firm be making each week?

Is the answer $10000?

Solutions

Expert Solution

Yes

===

Profit =(P-ATC)*Q

P=100 and ATC=90, Q=1000

Profit=(100-90)*1000

=10000

the profit is $10000


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