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Calculating Economic Profit/loss

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Assume a perfectly competitive firm is producing 300 units of output, P = $10, ATC of the 300th unit is $8, marginal cost of the 300th unit = $10, and AVC of the 300th unit = $6. Based on this information, the firm is:

A) earning an economic profit of $600.
B) earning an economic profit of $1,200.
C) incurring a loss of $600.
D) incurring a loss of $1,200.

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Solution Summary

Solution describes the steps to calculate economic profit based upon given cost and revenue information.

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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