Scenario: The fixed cost of producing 500 units of Good Y is $25,000, while the variable cost of producing 500 units of Good Y is $60,000.
-Refer to the scenario above.If the equilibrium price charged by a firm producing Good Y in the short run is $170,the firm will earn ________.

Question

Quizplus · Accepted Answer

The total cost of producing 500 units is the sum of fixed and variable costs, which is $25,000 + $60,000 = $85,000. The cost per unit is $85,000 / 500 = $170. If the equilibrium price is also $170, the firm earns $0 profit per unit because the selling price equals the cost per unit.

Scenario: the Fixed Cost of Producing 500 Units of Good