Suppose a perfectly competitive broccoli farm can produce 35 crates at an output level where marginal revenue equals marginal cost.The price per crate of broccoli is $25 and the average total cost is $30.What is the total profit or loss that this farm is earning?

Question

Quizplus · Accepted Answer

The farm is making a loss because the price per crate ($25) is less than the average total cost ($30). The loss per crate is $5, so the total loss is 35 crates * $5 = $175.

Suppose a Perfectly Competitive Broccoli Farm Can Produce 35 Crates