Consider a firm operating in a competitive market.The firm is producing 40 units of output,has an average cost of production equal to $5,and is earning $240 economic profit in the short run.What is the current market price?

Question

Quizplus · Accepted Answer

The economic profit is calculated as (Price - Average Cost) * Quantity. Given the economic profit is $240, average cost is $5, and quantity is 40, we can set up the equation: (P - 5) * 40 = 240. Solving for P gives P = 11.

Consider a Firm Operating in a Competitive Market