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For a competitive firm, profit per unit of output is equal to _____

Accounting Dec 19, 2020

For a competitive firm, profit per unit of output is equal to _____.

a. P - ATC

b. MC - ATC

c. TR - TC

d. P - AVC

e. MR - MC

Expert Solution

For a competitive firm, profit per unit of output is equal to a. P - ATC.

The formula to compute profit is:

Totalprofit=Totalrevenue−TotalcostTotalprofit=Totalrevenue−Totalcost

Totalprofit=PriceQuantity−TotalcostQuantityTotalprofit=PriceQuantity−TotalcostQuantity

Therefore, the profit per unit is as follows:

Profitperunit=(PriceQuantity−TotalcostQuantity)÷QuantityProfitperunit=(PriceQuantity−TotalcostQuantity)÷Quantity

Profitperunit=Price−Averagetotalcost

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