ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Yes, I understand this from the notes
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No, I don’t understand this from the notes
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No, I don’t understand this, as I have not read the notes
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None of the above
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Detailed explanation-1: -When total revenue exceeds total cost, the firm earns an economic profit. Profit is maximized when the gap between total revenue and total cost is the largest, at 10 cans per day.
Detailed explanation-2: -TR is lower than TVC implies that the firm is not earning enough revenue to pay the variable costs in the SR and hence will decide to shut down its operations. Hence, this option is correct.
Detailed explanation-3: -Gross profit is a company’s profits earned after subtracting the costs of producing and selling its products-called the cost of goods sold (COGS).
Detailed explanation-4: -A firm will shut down temporarily if the revenue it would get from producing is less than the variable costs of production. This occurs if price is less than average variable cost. 4.