A profit-maximizing competitive firm is earning a profit of $24,000. Its marginal cost is $17 and its average total cost is $13. How many units of output is the firm producing and selling?

Marginal Cost

The cost of producing one additional unit of a product or service, a critical factor in economic decision-making.

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the cost per unit of output.

Profit-maximizing

The process or strategy of adjusting production and operation to generate the highest possible profit.

Clarify the decision-making approach for enterprises functioning in perfectly competitive environments with respect to their production and operation.
Deduce and interpret aggregate revenue and gains based on explicit sales and expenditure details for an organization in a market with competition.

Verified Answer

Final Answer :

Profit = ($17 - $13)(Q) = $24,000, so Q = 6,000.

Learning Objectives

Clarify the decision-making approach for enterprises functioning in perfectly competitive environments with respect to their production and operation.
Deduce and interpret aggregate revenue and gains based on explicit sales and expenditure details for an organization in a market with competition.