Question

What is this firm's profit? P, MC, AC MC ATC P=100 25 20-- 9 q*=30

Answer 1

Answer: Firm's profit is $2,250

P, MC, AC MC Protit ATC P=100 25 20 9 q*=30

The market price of the product is $100. At this price, the firm is producing the profit-maximizing level of output of 30 units. From the figure, we see that, at this level of output, the firm's average total cost(ATC) is $25.

Now,

Profit = Total revenue - Total cost

Or,  Profit = Price * Quantity - ATC * Quantity

$\therefore$ The firm's profit = ($100 * 30) - ($25 * 30)

Or,  The firm's profit = $3,000 - $750

Or,  The firm's profit = $2,250

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