Differentiate between the terms "revenue" and "profit." Assume that a firm sells 20 units of a good at a price of $5 per unit. If the average total cost of the firm is $3 per unit, calculate the firm's profit
What will be an ideal response?
The revenue of a firm is equal to the price of the goods multiplied by the quantity of goods sold. On the other hand, the profit of a firm is equal to the difference of the revenue that a firm earns and the costs it incurs.
If a firm sells 20 units of a good at $5 each, its revenue is equal to 20 × $5 or $100.
If the average total cost of the firm is $3, the total cost it incurs is 20 × $3 or $60.
Hence, profits of the firm are $100 - $60 or $40.
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a. the money supply increases and the federal funds rate increases. b. the money supply increases and the federal funds rate decreases. c. the money supply decreases and the federal funds rate increases. d. the money supply decreases and the federal funds rate decreases.
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What will be an ideal response?