Incurring an economic loss or making an economic profit? please answer both part
ID: 1107031 • Letter: I
Question
Incurring an economic loss or making an economic profit? please answer both parts of question
Rose growing is a perfectly competitive industry and all growers have the same costs. The market price of roses is $23 a bouquet and each grower maximizes profit by producing 1,200 bouquets a week. Average total cost of producing roses is $19 a bouquet and average variable cost is $15 a bouquet. Minimum average variable cost is $7 a bouquet. Calculate each grower's economic profit or loss in the short run. In the short run, each grower is incurring an economic loss of $ a week. >>> If the firm incurs an economic loss, select loss in the dropdown window and do not enter a minus sign.Explanation / Answer
Answer
incurring an economic profit of $4800
Profit=(P-ATC)*Q
=(23-19)*1200
=4800
The economic profit is $4800