Suppose the market price (P*) is $3.00 per unit and the profit-maximizing output level (Q*) is 2,500 units (where MR = MC). When %3D the average fixed cost (AFC) is $1.00 and the total variable cost (TVC) is $5,000.00, the firm earns in economic profits. $0.00 $5.00 $500.00 $100.00

Suppose the market price (P) is $3.00 per unit and the profit-maximizing output level (Q) is 2,500 units (where MR = MC). When %3D the average fixed cost (AFC) is $1.00 and the total variable cost (TVC) is $5,000.00, the firm earns in economic profits. $0.00 $5.00 $500.00 $100.00

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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**Economic Profit Calculation Problem**

Suppose the market price (P*) is $3.00 per unit, and the profit-maximizing output level (Q*) is 2,500 units (where MR = MC). When the average fixed cost (AFC) is $1.00 and the total variable cost (TVC) is $5,000.00, the firm earns ______ in economic profits.

- $ \bigcirc $ $0.00
- $ \bigcirc $ $5.00
- $ \bigcirc $ $500.00
- $ \bigcirc $ $100.00

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There are no graphs or diagrams provided with the problem, so no further explanation is needed in that regard.

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