Comdex Computer Company is producing at a price of $10 with an average total cost of $12and a fixed cost of $300 . The firm is currently producing 100 units
What are the operating profits of this firm? What are the economic profits of this firm?
The firm is making an operating profit of $100 . To calculate this we need the average variable cost. The average fixed cost is $3 ($300/100). Subtracting that from the average total cost of $12 yields an average variable cost of $9 . That yields a per unit operating profit of $1 which results in a total operating profit of $100 ($1 x 100). The economic profit is -$200 [($10 - $12) x 100)] .
You might also like to view...
"According to Keynes, the economy is essentially a self-regulating system." Do you agree or disagree? Why?
What will be an ideal response?
The three basic legal forms of business enterprise in the United States are
A. vertical, horizontal, and conglomerate corporations. B. monopolies, enterprises, and competitors. C. national, global, and multinational corporations. D. proprietorships, partnerships, and corporations.