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In a situation when a firm is operating in a perfectly competitive firm and the ...


Question

In a situation when a firm is operating in a perfectly competitive firm and the total cost is given perfectly competitive firm and the total cost is given as N75.00. If the market price is N7.00 determine the profit. When 25 units are produced

Options

A)
N75.00
B)
N100
C)
N175.00
D)
N125.00

The correct answer is B.

Explanation:

Total cost (Tc) = N75.00
Price (P) = N7.00
Output (Q) = N25 units
Profit = ?
To derive the profit of the firm, the total revenue must be expressed. It can be expressed as
Total revenue (TR) = Price (P) × Quantity (q)
Therefore, TR = P × Q
= 7 × 25 units
Tr = N175
Therefore, Profit = TR – TC
= N175 – N75
Profit = N100

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Dicussion (1)

  • Total cost (Tc) = N75.00
    Price (P) = N7.00
    Output (Q) = N25 units
    Profit = ?
    To derive the profit of the firm, the total revenue must be expressed. It can be expressed as
    Total revenue (TR) = Price (P) × Quantity (q)
    Therefore, TR = P × Q
    = 7 × 25 units
    Tr = N175
    Therefore, Profit = TR – TC
    = N175 – N75
    Profit = N100