Garcia company is a perfectly competitive firm. the market price of its output is $10. the firm is currently producing 100 units of output. at this level of output, the firmâ€™s average total cost is $8 per unit, its average variable cost is $6 per unit, and its marginal cost is $10 per unit. what is the firmâ€™s profit?

Question

Mathematics

Christopher Pollard

5 July, 20:10

Garcia company is a perfectly competitive firm. the market price of its output is $10. the firm is currently producing 100 units of output. at this level of output, the firmâ€™s average total cost is $8 per unit, its average variable cost is $6 per unit, and its marginal cost is $10 per unit. what is the firmâ€™s profit?

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Camden Johnson · Answer 1

Answer: $200.

Any firm (regardless of market structure) will maximize profit by producing and selling the quantity at which marginal revenue is equal to marginal cost. In the special case of a perfectly competitive firm, marginal revenue is equal to price.