On a per-unit basis, economic profit can be determined as the difference between
A) marginal revenue and product price.
B) product price and average total cost.
C) marginal revenue and marginal cost.
D) average fixed cost and product price.

Question

Quizplus · Accepted Answer

Economic profit is the difference between total revenue and total cost, including both explicit and implicit costs. On a per-unit basis, we can determine economic profit by calculating the difference between product price and average total cost (ATC). This is because ATC represents the per-unit cost of production, including both explicit and implicit costs. Therefore, if the product price is higher than the average total cost, the firm is earning an economic profit per unit.

On a Per-Unit Basis, Economic Profit Can Be Determined as the Difference