Question:
A firm produces 220 units of a good which cost an average of 8.25 each to produce and sells them at a price of 9.95. What is its profit?
Answer:
Cost of one good = \(200 \div 8.25=26.67\)
\(\pi = TR - TC\)
\(TR = p \times q\)
\(9.95 \times 220 = 2189\)
\(TC = 8.25 \times 220 = 1815\)
\(\pi = 2189 - 1815\)
\(= 374\)
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