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a perfectly competitive market, assume the market price is $10 per unit, and the profit-maximizing quantity is 45 units. If the ATC at 45 units is $8, the profit/loss amount at the profit-maximizing quantity is $

Question

a perfectly competitive market, assume the market price is 10perunit,andtheprofit−maximizingquantityis45units.IftheATCat45unitsis10 per unit, and the profit-maximizing quantity is 45 units. If the ATC at 45 units is 8, the profit/loss amount at the profit-maximizing quantity is $

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Solution

To calculate the profit or loss in this scenario, we need to follow these steps:

  1. Calculate the total revenue: This is done by multiplying the market price by the quantity sold. In this case, it would be 10∗45=10 * 45 = 450.

  2. Calculate the total cost: This is done by multiplying the average total cost (ATC) by the quantity. In this case, it would be 8∗45=8 * 45 = 360.

  3. Subtract the total cost from the total revenue to find the profit or loss. In this case, it would be 450−450 - 360 = $90.

So, the profit at the profit-maximizing quantity is $90.

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