Leatherbound, Inc. produces and sells baseballs in a competitive market. The total cost of producing 200 baseballs is $\$ 900$. The price of a baseball is $\$ 10$.

What is this firm's economic profit (or loss)?
Choose 1 answer:
(A) $-\$ 890$
(B) $\$ 2000$
(c) $\$ 9000$
(D) $\$ 1100$
(E) $\$ 1800$

Question

Leatherbound, Inc. produces and sells baseballs in a competitive market. The total cost of producing 200 baseballs is $\$ 900$. The price of a baseball is $\$ 10$.

What is this firm's economic profit (or loss)?
Choose 1 answer:
(A) $-\$ 890$
(B) $\$ 2000$
(c) $\$ 9000$
(D) $\$ 1100$
(E) $\$ 1800$

Accepted Answer

∻Solution∻ ‖ a ⋮ Economic Profit Calculation: Economic profit is calculated as total revenue minus total cost. ‖ ‖ b ⋮ Total Revenue Calculation: Total revenue is the price per unit times the quantity sold, so $10 imes 200 = $2000. ‖ ‖ c ⋮ Economic Profit or Loss: Subtract the total cost from the total revenue to find the economic profit or loss, so $2000 - $900 = $1100. ‖ ∻Answer∻ ⚹ $1100 ⚹ ∻Key Concept∻ ⚹ Economic Profit ⚹ ∻Explanation∻ ⚹ Economic profit is found by subtracting total costs from total revenues; in this case, Leatherbound, Inc. has an economic profit of $1100. ⚹◊What is the formula to calculate economic profit in⍭ Generate me a similar question◊$

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