Suppose a firm produced 500 units of output but sold only 400 of the units it produced. The average cost of production for each unit of output produced was $100. Each of the 400 units sold were sold for a price of $80. The total revenue of this firm would be:

Question

Quizplus · Accepted Answer

Total cost of producing 500 units = 500 x $100 = $50,000
Total revenue from selling 400 units = 400 x $80 = $32,000
Total loss = total cost - total revenue = $50,000 - $32,000 = $18,000
Since the firm incurred a loss, the answer cannot be A or B. The correct answer is C, which represents the total revenue earned from selling the 400 units.

Suppose a Firm Produced 500 Units of Output but Sold