Consider the price and quantity data below for a perfectly competitive firm producing mousetraps. $$\begin{array}{l}
\begin{array} { | l | l | }
\hline \text { Price } ( \$ ) & \text { Quantity } \
\hline 5 & 1000 \
\hline 5 & 1250 \
\hline 5 & 1500 \
\hline 5 & 1750 \
\hline 5 & 2000 \
\hline
\end{array}\
\text { TABLE 9-1 }
\end{array}$$
-Refer to Table 9- 1. Suppose this firm is producing 1250 mousetraps and its average total cost is $4 per unit. The firm will be
A) suffering losses of $5000.
B) earning profits of $1250.
C) earning profits of $5000.
D) suffering losses of $1250.
E) breaking even.

Question

Consider the price and quantity data below for a perfectly competitive firm producing mousetraps. $$\begin{array}{l}
\begin{array} { | l | l | } 
\hline \text { Price } ( \$ ) & \text { Quantity } \
\hline 5 & 1000 \
\hline 5 & 1250 \
\hline 5 & 1500 \
\hline 5 & 1750 \
\hline 5 & 2000 \
\hline
\end{array}\
\text { TABLE 9-1 }
\end{array}$$
-Refer to Table 9- 1. Suppose this firm is producing 1250 mousetraps and its average total cost is $4 per unit. The firm will be
A) suffering losses of $5000.
B) earning profits of $1250.
C) earning profits of $5000.
D) suffering losses of $1250.
E) breaking even.

Quizplus · Accepted Answer

The firm sells each mousetrap for $5 and produces 1250 units, generating $6250 in revenue. With an average total cost of $4 per unit, the total cost is $5000. Thus, the profit is $6250 - $5000 = $1250.

Consider the Price and Quantity Data Below for a Perfectly