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BooksCom Is Earning a Total Revenue of $200,000 Per Year

question 84

Essay

Books.com is earning a total revenue of $200,000 per year. Its annual total fixed costs are $50,000 and its annual total variable costs are $75,000. What is the operating profit for Books.com? What is economic profit?


Definitions:

Per Unit Profit

The profit earned from selling one unit of a product, calculated by subtracting the cost per unit from the selling price per unit.

MR = MC Rule

A principle in economics where the optimal level of output is reached when marginal revenue equals marginal cost.

Price Taker

An individual or company that must accept prevailing prices in the market of its products or services, lacking the market power to influence prices on its own.

Break Even

The point at which total cost and total revenue are equal, resulting in no net loss or gain.

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