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) $-\$ 3$

Question

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) $-\$ 3$

Accepted Answer

∻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 imes 100 = $900. ‖ ‖ d ⋮ Total Cost: Total cost (TC) is the cost per unit times the number of units produced, so TC = $6 imes 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 $300. ⚹◊How does the calculation of economic profit differ from accounting profit in this scenario of Michonne's Mystery Meats, LLC?⍭ Generate me a similar question◊$

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