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Assume a certain firm is producing 1,000 units of output (so = 1,000)

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Assume a certain firm is producing 1,000 units of output (so = 1,000). At = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit.

At = 1,000, the firm's profit amounts to:

a. $-200

b. $1,000

c. $3,000

d. $4,000

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In computing the profit, we use the average total cost in determining the total cost of the firm and the selling price in determining the total revenue. Let us compute the firm's profit.

The firm's profit is b. $1,000.