Credit Sprint / Practice problems / Economic profit in perfect competition

Economic profit in perfect competition practice problems

Microeconomics Unit 3. Try each one, then open the worked solution. The Credit Sprint app generates unlimited new versions with fresh numbers.

Problem 1.

A perfectly competitive firm sells 80 units at $28. Its average total cost at that output is $31. What is its economic profit? (Use a negative number for a loss.)

Show solution

(P − ATC) × Q = ($28 − $31) × 80 = $-240.

Problem 2.

A perfectly competitive firm sells 45 units at $20. Its average total cost at that output is $18. What is its economic profit? (Use a negative number for a loss.)

Show solution

(P − ATC) × Q = ($20 − $18) × 45 = $90.

Problem 3.

A perfectly competitive firm sells 75 units at $36. Its average total cost at that output is $41. What is its economic profit? (Use a negative number for a loss.)

Show solution

(P − ATC) × Q = ($36 − $41) × 75 = $-375.

Problem 4.

A perfectly competitive firm sells 50 units at $17. Its average total cost at that output is $22. What is its economic profit? (Use a negative number for a loss.)

Show solution

(P − ATC) × Q = ($17 − $22) × 50 = $-250.

Problem 5.

A perfectly competitive firm sells 10 units at $34. Its average total cost at that output is $28. What is its economic profit? (Use a negative number for a loss.)

Show solution

(P − ATC) × Q = ($34 − $28) × 10 = $60.

Problem 6.

A perfectly competitive firm sells 65 units at $40. Its average total cost at that output is $37. What is its economic profit? (Use a negative number for a loss.)

Show solution

(P − ATC) × Q = ($40 − $37) × 65 = $195.