In a situation when a firm is operating in a perfectly competitive firm and the total cost is given perfectly competitive firm and the total cost is given as N75.00. If the market price is N7.00 determine the profit. When 25 units are produced
A. N75.00 B. N100 C. N175.00 D. N125.00
Correct Answer: B
Explanation
Total cost (Tc) = N75.00 Price (P) = N7.00 Output (Q) = N25 units Profit = ? To derive the profit of the firm, the total revenue must be expressed. It can be expressed as Total revenue (TR) = Price (P) × Quantity (q) Therefore, TR = P × Q = 7 × 25 units Tr = N175 Therefore, Profit = TR – TC = N175 – N75 Profit = N100
