Rose growing is a perfectly competitive industry and all growers have the same c

Question

Rose growing is a perfectly competitive industry and all growers have the same costs The market price of roses is $24 a bouquet and each grower maximizes profit by producing 2,800 bouquets a week. Average total cost of producing roses is $22 a bouquet and average variable cost is $16 a bouquet. Minimum average variable cost is $8 a bouquet Calculate each grower's economic profit or loss in the short run. In the short run, each grower is of Sa week. >> If the firm incurs an economic loss, select loss in the dropdown window and do not enter a minus sign.

Explanation / Answer

Ans

Each is making profit since price>Average total cost

Profit=price (quantity) - ATC(quantity)

=24(2800)-22(2800)=5600

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