If the price is $10 and marginal revenue equals marginal cost at $7 at a quantity of 400 lbs.If the firm's profit at that point is $800,find the average total cost.

Question

Quizplus · Accepted Answer

We know that the profit at the given quantity is $800. We can also calculate the total revenue at this point by multiplying the quantity by the price:

Total Revenue = 400 lbs x $10 = $4,000

We can use the profit formula to calculate the total cost:

Profit = Total Revenue - Total Cost

$800 = $4,000 - Total Cost

Total Cost = $4,000 - $800 = $3,200

Finally, we can calculate the average total cost by dividing the total cost by the quantity:

Average Total Cost = Total Cost / Quantity

Average Total Cost = $3,200 / 400 lbs = $8

Therefore, the best choice is B) $8.

If the Price Is $10 and Marginal Revenue Equals Marginal