Michonne's Mystery Meats, LLC produces 100 pounds of meat each day and sells it at a price of $\$ 9$. The average total cost of producing each pound of meat is $\$ 6$.

What is this firm's economic profits?

Choose 1 answer:
(A) $-\$ 300$
(B) $\$ 300$
(c) $-\$ 3$
(D) $\$ 3$
(E) $\$ 100$

Question

Michonne's Mystery Meats, LLC produces 100 pounds of meat each day and sells it at a price of $\$ 9$. The average total cost of producing each pound of meat is $\$ 6$.

What is this firm's economic profits?

Choose 1 answer:
(A) $-\$ 300$
(B) $\$ 300$
(c) $-\$ 3$
(D) $\$ 3$
(E) $\$ 100$

Accepted Answer

∻Solution∻ ‖ a ⋮ Revenue Calculation: The total revenue is calculated by multiplying the quantity of meat produced by the price per pound. $TR = 100 ext{ pounds} imes \$9 = \$900$ ‖ ‖ b ⋮ Total Cost Calculation: The total cost is calculated by multiplying the quantity of meat produced by the average total cost per pound. $TC = 100 ext{ pounds} imes \$6 = \$600$ ‖ ‖ c ⋮ Economic Profit Calculation: Economic profit is calculated by subtracting the total cost from the total revenue. $EP = TR - TC = \$900 - \$600 = \$300$ ‖ ∻Answer∻ ⚹ $300$ ⚹ ∻Key Concept∻ ⚹ Economic Profit Calculation ⚹ ∻Explanation∻ ⚹ Economic profit is the difference between total revenue and total cost. In this case, Michonne's Mystery Meats, LLC has a total revenue of $900 and a total cost of $600, resulting in an economic profit of $300. ⚹◊How does the firm's economic profit relate to its average total cost and revenue in this scenario⍭ Generate me a similar question◊

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