Suppose a monopolistic competitor produces 2,000 units of the good in equilibrium and charges a price of $10 for each unit.If the average total cost of producing 2,000 units of the good is $6,what is the total profit earned by the producer?

Question

Quizplus · Accepted Answer

The total profit is calculated by subtracting the total cost from the total revenue. The total revenue is price times quantity, which is $10 * 2,000 = $20,000. The total cost is average total cost times quantity, which is $6 * 2,000 = $12,000. Therefore, the total profit is $20,000 - $12,000 = $8,000.

Suppose a Monopolistic Competitor Produces 2,000 Units of the Good