Answer the next question on the basis of the following cost data for a purely co

Question

Answer the next question on the basis of the following cost data for a purely competitive seller:

Product TFC    TVC
0            $50     $0
1              50     70
2              50     120
3              50     150
4              50     220
5              50     300
6              50     390
Refer to the above data. If the product price is $75 at its optimal output, will the firm realize an economic profit, break even, or incur an economic loss? How much will the profit or loss be? Show all calculations.

Explanation / Answer

Product TFC TVC price profit 0 $50 $0 75 -50 1 50 70 75 -45 2 50 120 75 -20 3 50 150 75 25 4 50 220 75 30 5 50 300 75 25 6 50 390 75 10 In this case, they should produce 4 goods. In this case they will be earning an economic profit. Anything before this is a loss and after will result in a loss Hope this helps

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.