If a fishing boat owner brings 10,000 fish to market and the market price is $7 per fish, she will have $70,000 in total revenue. If the average variable cost of 10,000 fish is $4 and the fixed cost of the boat is $20,000, what is her profit?

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Quizplus · Accepted Answer

The profit is calculated by subtracting total costs (variable and fixed) from total revenue. Total revenue is $70,000. Total variable cost is $4 per fish for 10,000 fish, which equals $40,000. Adding the fixed cost of $20,000 gives total costs of $60,000. Subtracting this from the total revenue ($70,000 - $60,000) gives a profit of $10,000.

If a Fishing Boat Owner Brings 10,000 Fish to Market