A firm produces 20 units of output at a market price of $5, a marginal cost...

A firm produces 20 units of output at a market price of $5, a marginal cost of $5, and an average cost of $3. the firm's economic profit is $ _ and the firm _ maxmimizing it's economic profit

Expert Solution

The total revenue is $100. The total cost is $60. The economic profit is thus $40. The difference between the total revenue and total cost. The firm maximizes profits where marginal revenue = marginal cost. Here we have P=mc. Thus the profits are maximized.

Rahul Sunny answered 2 years ago

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