A Firm Is Producing 100 Units, Which Is Its Profit-

question 34

Multiple Choice

A firm is producing 100 units, which is its profit- maximising quantity. The price is $3, the total fixed costs are $40 and the average variable cost for each unit is $1.20. The firm's opportunity costs of being in business are included in both the fixed and variable costs. The firm's supernormal profit is:

• A) $140
• B) $0
• C) - $60
• D) $180

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Definitions:

Selling Price

The amount for which a good or service is sold to customers, determining the revenue generated from sales.

Variable Costs

Expenses that vary in relation to the volume of products or services a company delivers.

Hourly Wage Rates

The amount of money paid for each hour of work performed, commonly used in various employment contexts.

Contribution Margin

The difference between sales revenue and variable costs, indicating how much of the revenue contributes to covering fixed costs and generating profit.