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Question
Macroeconomics
Posted 7 months ago

Michonne's Mystery Meats, LLC produces 100 pounds of meat each day and sells it at a price of $9\$ 9. The average total cost of producing each pound of meat is $6\$ 6.

What is this firm's economic profits?

Choose 1 answer:
(A) $300\$ 300
(B) $100\$ 100
(c) $300-\$ 300
(D) $3\$ 3
(E) $3-\$ 3
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Answer from Sia
Posted 7 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 9perpoundandatotalcostof9 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 = 9×100=9 \times 100 = 900
d
Total Cost: Total cost (TC) is the cost per unit times the number of units produced, so TC = 6×100=6 \times 100 = 600
e
Economic Profit: Economic profit (EP) is TR minus TC, so EP = 900900 - 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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