Asked by Adriana Davis on Jul 16, 2024
Verified
Assume a firm in a competitive industry is producing 800 units of output, and it sells each unit for $6. Its average total cost is $4. Its profit is
A) −$1,600.
B) $1,600.
C) $3,200.
D) $8,000.
Competitive Industry
An industry where numerous firms compete against each other to sell similar products to consumers.
Average Total Cost
The total cost of production (fixed and variable costs) divided by the quantity of output produced.
- Determine the firm's optimal production level in a competitive market setting.
- Measure the economic rewards in distinct market situations.
Verified Answer
JS
Jaspreet SanghaJul 20, 2024
Final Answer :
B
Explanation :
Profit is calculated as (Price - Average Total Cost) * Quantity. Here, it is ($6 - $4) * 800 = $2 * 800 = $1,600.
Learning Objectives
- Determine the firm's optimal production level in a competitive market setting.
- Measure the economic rewards in distinct market situations.