Select one a 2800 b 2400 c 2480 d 2880 e 5280SolutionFirm ma

Select one:

a. -$2,800

b. $2,400

c. $2,480

d. $2,880

e. $5,280

Solution

Firm maximizes profit at MR=MC

So it produces 80 units of output at MR=MC

At output of 80 units,Average toatal cost(ATC)=98$

It charges price based on demand curve at Q=80

So it charges 125$ at Q=80 units

Profit=(P-ATC)Q=(125-98)80=2160

Correct answer should be 2160