Profit can be shown graphically by depicting a firm's costs and revenues, and it is determined mathematically by calculating the:

Question

Quizplus · Accepted Answer

Profit is calculated by subtracting a firm's total costs from its total revenues. Therefore, the area of the box that is (price minus average cost) times quantity represents the firm's profit, as it shows the difference between the price received for each unit sold and the average cost of producing each unit, multiplied by the quantity sold.

Profit Can Be Shown Graphically by Depicting a Firm's Costs