if Daniel sells 300 big Macs at a price of 400 and his avera

if Daniel sells 300 big Macs at a price of 4.00, and his average cost of producing 300 big macs is 3.75 what is the profits

Solution

Total output of big Macs = 300

Price per big Mac = $4

Calculate Total Revenue from sale of Big Macs -

Total revenue = Total output * Price = 300 * $4 = $1,200

Average cost (cost per unit) of big Mac = $3.75

Calculate Total Cost of producing Big Macs -

Total Cost = Total Output * Average cost = 300 * $3.75 = $1,125

Calculate Total profit -

Total profit = Total revenue - Total cost = $1,200 - $1,125 = $75

The profits is $75.