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19 July, 12:46

A firm produces 10 calculators that they sell for $15 each. The average variable cost for the production of 10 calculators is $13/unit. The fixed costs for this firm equal $20. What is the value of this firm's profits

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  1. 19 July, 13:17
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    The correct answer is $0.

    Explanation:

    According to the scenario, the given data are as follows:

    Number of calculator = 10

    Sell price = $15 per calculator

    So, total revenue = 10 * $15 = $150

    Now variable cost = $13 per unit

    So, total variable cost = $13 * 10 = $130

    Fixed cost = $20

    So, Total cost = Variable cost + fixed cost

    = $130 + $20 = $150

    So, we can calculate the firm profit by using following formula:

    Firm's profit = Total revenue - total cost

    = $150 - $150

    = $0
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