Multiple Choice
Assume the quantity produced and sold (q_{pm}) is 100 units, and the price per unit is \$5. What is your total revenue?
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10. The Costs of Production
Revenue, Cost, and Profit
Multiple Choice
For a firm, profit equals total _____ minus total _____.
A
cost; revenue
B
price; quantity
C
output; input
D
revenue; cost
Verified step by step guidance1
Understand the definition of profit in microeconomics: Profit is the financial gain a firm makes after subtracting all costs from its earnings.
Recall the formula for profit: \(\text{Profit} = \text{Total Revenue} - \text{Total Cost}\).
Identify what total revenue means: It is the total amount of money a firm receives from selling its goods or services, calculated as price times quantity sold.
Identify what total cost means: It is the total expense incurred in producing goods or services, including fixed and variable costs.
Conclude that profit equals total revenue minus total cost, which matches the correct answer: revenue; cost.
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