Question

Outpuit AFC AVC ATC MC 1 $300 $100 $400 $100 2 150 75 225 50 3 100 70 170 60 4 75 73 148 80 5 60 80 140 110 6 50 90 140 140 7 43 103 146 180 8 38 119 156 230 9 33 138 171 290 10 30 160 190 360 These are cost data for a firm that is selling under pure competition. If output price is $290, the per-unit economic profit at the profit-maximizing output is:__________

Answer 1

Answer:

The answer is $119

Explanation:

Solution:

The firm is working in a competitive market that is seen as perfect.

Thus,

The profit the condition for maximizing profit is given below:

P = MR =MC

Now,

The market price of the product is =$290

So,

P = $290

From the given table, we noticed that the profit maximizing output level is 9 units when P = MC

The profit (π) = total revenue - cost total

= ( P * Q) - ( ATC * Q)

= 290 * 9 - 171 * 9

= 2610 - 1539

= 1071

Therefore, the per-unit economic profit at the profit-maximizing output is

=$1071/9

=$119