A perfectly competitive firm is producing 1,200 units, which is their profit-maximizing output level. The market price for their good is $5 and the firm's average total cost to produce the 1,200 units is $4.50. What is their profit or loss from producing the 1,200 units?

Question

Quizplus · Accepted Answer

To find the profit or loss, we need to calculate the total revenue and total cost of producing 1,200 units.
Total Revenue = Price x Quantity = $5 x 1,200 = $6,000
Total Cost = Average Total Cost x Quantity = $4.50 x 1,200 = $5,400
Profit = Total Revenue - Total Cost = $6,000 - $5,400 = $600
Therefore, the answer is D, a profit of $600.

A Perfectly Competitive Firm Is Producing 1,200 Units, Which Is