Suppose a perfectly competitive ukulele factory can produce 35 ukuleles at an output at which marginal cost equals marginal revenue. The price per ukulele is $1300 and the average total cost is $1500. What is the profit or loss that this furniture factory is earning?

Question

Quizplus · Accepted Answer

The loss is calculated by subtracting total costs from total revenue. Total revenue is price per unit times quantity (35 ukuleles * $1300 = $45,500). Total cost is average total cost times quantity (35 ukuleles * $1500 = $52,500). The loss is $52,500 - $45,500 = -$7,000.00.

Suppose a Perfectly Competitive Ukulele Factory Can Produce 35 Ukuleles