Suppose a monopolist charges a price of $27 for its product and sells 10 units at...

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price? (show your work)

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Expert Solution

Total revenue of the firm = Price x quantity

= $27 x 10 =$270.

Total cost = variable cost + fixed cost = 10 + 12 = 22.

Total cost = 22 x 10 = 220.

profit = 270 -220 (total revenue - total cost)

= $50 is the profit of the firm.

Rahul Sunny answered 1 year ago

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