A firm receives $10 per unit at an equilibrium level of output of 80 units.The average total cost at 80 units of output is $8.The firm makes a total economic profit of:

Question

Quizplus · Accepted Answer

The economic profit can be calculated by subtracting the total cost from the total revenue. At an equilibrium level of output of 80 units, the total revenue is:

Total revenue = Price per unit x Quantity = $10 x 80 = $800

The average total cost at 80 units of output is given as $8. Therefore, the total cost is:

Total cost = Average total cost x Quantity = $8 x 80 = $640

The economic profit is:

Economic profit = Total revenue - Total cost = $800 - $640 = $160

Therefore, the firm makes a total economic profit of $160, which is option B.

A Firm Receives $10 Per Unit at an Equilibrium Level