Subjects microeconomics

Short Run Profit

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Short Run Profit


1. **State the problem:** We are given a firm's total cost at different quantities and a fixed price per unit of 7.00. We need to find the firm's profit level in the short run. 2. **Formula for profit:** $$\text{Profit} = \text{Total Revenue} - \text{Total Cost}$$ where $$\text{Total Revenue} = \text{Price} \times \text{Quantity}$$ 3. **Calculate total revenue for each quantity:** - For quantity 0: $7 \times 0 = 0$ - For quantity 1: $7 \times 1 = 7$ - For quantity 2: $7 \times 2 = 14$ - For quantity 3: $7 \times 3 = 21$ - For quantity 4: $7 \times 4 = 28$ - For quantity 5: $7 \times 5 = 35$ - For quantity 6: $7 \times 6 = 42$ - For quantity 7: $7 \times 7 = 49$ 4. **Calculate profit for each quantity:** - Quantity 0: $0 - 25 = -25$ - Quantity 1: $7 - 26 = -19$ - Quantity 2: $14 - 29 = -15$ - Quantity 3: $21 - 33 = -12$ - Quantity 4: $28 - 38 = -10$ - Quantity 5: $35 - 44 = -9$ - Quantity 6: $42 - 51 = -9$ - Quantity 7: $49 - 62 = -13$ 5. **Determine the profit-maximizing quantity:** The firm will choose the quantity that maximizes profit. Here, the highest profit is $-9$ at quantities 5 and 6. 6. **Answer:** The firm's profit level in the short run is $-9$. Therefore, the correct choice is **c. - 9.**