A firm is producing 2,500 units at its optimal output, with average variable cost per unit of $4 and average fixed cost per unit of $2.50.If sells its output at $8 per unit, total profit is
A)$10,000.
B)$3,750.
C)$1,500.
D)$20,000

Question

Quizplus · Accepted Answer

Total cost per unit = Average variable cost + Average fixed cost = $4 + $2.50 = $6.50
Total revenue per unit = Selling price per unit = $8
Profit per unit = Total revenue per unit - Total cost per unit = $8 - $6.50 = $1.50
Total profit = Profit per unit * Number of units = $1.50 * 2,500 = $3,750.
Therefore, the answer is B.

A Firm Is Producing 2,500 Units at Its Optimal Output