Question

Macroeconomics

Posted 6 months ago

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Michonne's Mystery Meats, LLC produces 100 pounds of meat each day and sells it at a price of $\$ 9$. The average total cost of producing each pound of meat is $\$ 6$.
What is this firm's economic profits?
Choose 1 answer:
(A) $\$ 300$
(B) $\$ 100$
(c) $-\$ 300$
(D) $\$ 3$
(E) $-\$ 3$
```

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Answer from Sia

Posted 6 months ago

Solution

a

Economic Profit Calculation: Economic profit is calculated as total revenue minus total cost, where total cost includes both explicit and implicit costs

b

Given Data: Michonne's Mystery Meats, LLC produces 100 pounds of meat daily at a selling price of $9 per pound and a total cost of$6 per pound

c

Total Revenue: Total revenue (TR) is the selling price per unit times the number of units sold, so TR = $9 \times 100 =$900

d

Total Cost: Total cost (TC) is the cost per unit times the number of units produced, so TC = $6 \times 100 =$600

e

Economic Profit: Economic profit (EP) is TR minus TC, so EP = $900 -$600 = $300

Answer

(A) $300

Key Concept

Economic Profit

Explanation

Economic profit is found by subtracting total costs from total revenues; in this case, it is $300.

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