In: Economics
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?
Yes
===
Profit =(P-ATC)*Q
P=100 and ATC=90, Q=1000
Profit=(100-90)*1000
=10000
the profit is $10000