Question

Consider that your profit-maximizing quantity of 500 can be produced at an average cost per unit of $9 and sold for a market price of $14 What is your profit per unit? What is your total profit?

Answer 1

Based on the quantity sold and the price, the profit per unit is $5 and the total profit is $2,500

The profit made from each unit sold can be found as:

= Market price - Average cost

= 14 - 9

= $5

The total profit would therefore be:

= Profit per unit x Number of units sold

= 5 x 500

= $2,500

In conclusion, the profit per unit is $5 and the total profit is $2,500

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