Suppose that a firm is currently maximizing its short-run profit at an output of 50 units.If the current price is $9,the marginal cost of the 50th unit is $9,and the average cost of producing 50 units is $4,what is the firm's profit?

Question

Quizplus · Accepted Answer

To maximize profit, a firm will produce at the point where marginal revenue (MR) equals marginal cost (MC). In this case, since the firm is maximizing profit at 50 units, we know that MR = MC at this level of output.

We also know that the marginal cost of the 50th unit is $9, which is equal to the price of $9. This means that the firm is earning a profit of $9 - $4 = $5 per unit.

Therefore, the total profit at an output of 50 units is:

Profit = (Price - Average Cost) x Quantity 
Profit = ($9 - $4) x 50 
Profit = $250

So the correct answer is C, $250.

Suppose That a Firm Is Currently Maximizing Its Short-Run Profit