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Homework answers / question archive / If a monopolistically competitive firm is producing 450 units of output and at this output level, the price is $15, and the average total cost is $12, the firm profit/loss is equal to: A
If a monopolistically competitive firm is producing 450 units of output and at this output level, the price is $15, and the average total cost is $12, the firm profit/loss is equal to:
A. $1,350
B. -$1,525
C. -$1,350
D. $1,525
\The answer is A. $1,350.$1,350.
The equation is
π=(P−ATC)⋅Qπ=(P−ATC)⋅Q
Where:π=profitP=PriceATC=Average Total CostQ=QuantittyWhere:π=profitP=PriceATC=Average Total CostQ=Quantitty
Substituting values:
π=($15−$12)⋅450=$1,350
