A price-taker firm is currently producing 50 units of output at an average total cost of $3 per unit. If the market price is $7, then the firm's total economic profit is
A) $4.
B) $150.
C) $200.
D) $350.

Question

Quizplus · Accepted Answer

To calculate the economic profit, we need to first calculate the total revenue and the total cost.

Total Revenue = Price x Quantity
Total Revenue = $7 x 50
Total Revenue = $350

Total Cost = Average Total Cost x Quantity
Total Cost = $3 x 50
Total Cost = $150

Economic Profit = Total Revenue - Total Cost
Economic Profit = $350 - $150
Economic Profit = $200

Therefore, the firm's total economic profit is $200. The best choice is C.

A Price-Taker Firm Is Currently Producing 50 Units of Output