Question

What should the firm's profit, when average variable cost is 20 per unit, average fixed cost is per unit, price of the output is 25 per unit and only 8 units of the output are produced?

Answer 1

Question:

What should the firm's profit, when average variable cost is 20 per unit, average fixed cost is per unit, price of the output is 25 per unit and only 8 units of the output are produced?

Answer:

Profit= (-) ₹40 (loss)

Explanation:

• AVC=20;
• AFC = 10;
• Price=25
• Output = 8 units

TVC = AVC x Output = ₹20 x ₹8 = ₹160

TFC AFC x Output = ₹10 x ₹8 = ₹780

TC = TFC + TVC =₹ 80+₹160=₹240

TR= Price x Output=₹ 25 x₹ 8 = ₹200

Profit = TR-TC=₹200-₹240=(-)₹40

As, TC > TR.

Profit= (-) ₹40 (loss)

$\huge \bold {{@QianNiu}}$

Answer 2

Refer to the attachment

Hope it helps you