Refer to the figure below. If this firm is a price taker and the price of each unit of output is $10, then at its profit-maximizing level of output, this firm will earn a ______ of ______.

Question

Quizplus · Accepted Answer

At the profit-maximizing level of output, the firm will produce 6 units of output. The total revenue at this level of output is $60 (6 units x $10 per unit). However, the total cost at this level of output is $300 (the sum of fixed cost of $100 and variable cost of $200). Therefore, the firm will incur a loss of $240 ($60 total revenue – $300 total cost).

Refer to the Figure Below