Question

The Campus Crustacean Company receives $2 per box for its crawfish and is selling 1,600 boxes to maximize its profits. What is the profit per box of crawfish at this equilibrium level of output if the average variable cost is $1 per box and total fixed costs are $1,200?

Answer 1

Answer:

Profit per box of crawfish $0.25

Explanation:

To calculate the Total profit, we can solve the expression;

Total profit=Total selling price-Total purchase price

where;

Total purchase price=(Variable cost per box×number of boxes purchased)+Total fixed costs

Total purchase price=(1×1600)+1,200=$2,800

Total selling price=Selling price per box×number of boxes

Total selling price=(2×1600)=$3,200

replacing in the expression;

Total profit=Total selling price-Total purchase price

Total profit=($3,200-$2,800)=$400

Total profit=$400

To calculate the profit per box;

Total profit=profit per box(p)×number of boxes sold

400=p××1600

p=400/1600=0.25

Profit per box=p=$0.25 per box