A firm in a perfectly competitive industry is maximizing its profits at 400 units of output. If the marginal revenue and marginal cost are each $35 and the firm's average total cost is $25, this firm's profit is

Question

Quizplus · Accepted Answer

Profit is calculated as (Price - Average Total Cost) * Quantity. Here, Price = Marginal Revenue = $35, ATC = $25, and Quantity = 400 units. So, Profit = ($35 - $25) * 400 = $10 * 400 = $4,000.

A Firm in a Perfectly Competitive Industry Is Maximizing Its