If a business’ total economic cost of producing 10,000 units…

Question

If a business’ total economic cost of producing 10,000 units of a product is N750,000 and this output is sold to consumers for N1,000,000, then the firm would earn

Answer 1

If a business’ total economic cost of producing 10,000 units of a product is N750,000 and this output is sold to consumers for N1,000,000, then the firm would earn

A normal profit of N750,000
An economic profit of N750,000
An economic profit of N250,000 ✓
A normal profit o N1,750,000

Explanation

Profit is revenue minus total cost.

N1,000,000 − N750,000 = N250,000.

Total economic cost already includes the normal profit the owner needs to stay in business. So the extra N250,000 is an economic profit of N250,000.

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