ChemCo is a price-taker able to receive $10 for each bottle of vitamins they sell. At...
ChemCo is a price-taker able to receive $10 for each bottle of vitamins they sell. At the profit maximizing level of production their AVC = $5 and AFC = $3. Given the following points on their MC curve, what is their maximum possible profit?
| Quantity | 0 | 100 | 200 | 300 | 400 | 500 | 600 |
| Marginal Cost | n/a | $8 | $4 | $6 | $8 | $10 | $15 |
Group of answer choices
No profit
$4000
$5000
$1000
$500
Homework Answers
Profit maximizing level of output determined by P=MC
For P=10=MC firm will produce Q=500 units
Total revenue =P*Q=10*500=5000
Total cost =(AVC+AFC)*Q=(5+3)*500=4000
Profit =Total revenue-Total cost=5000-4000=$1000
Answer: $1000
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ChemCo is a price-taker able to receive $10 for each bottle of
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