If a firm produces 5 units and sells each for \$39.00, and its total cost of producing 5 units is \$160.00, what is the firm's profit or loss?

• A. Profit of \$35.00
• B. Loss of \$35.00
• C. Profit of \$195.00
• D. Loss of \$160.00

Answer: (A)

Verified step by step guidance

1. Calculate the total revenue (TR) by multiplying the quantity of units sold by the price per unit. Use the formula: \(TR = Q \times P\), where \(Q\) is quantity and \(P\) is price per unit.
2. Calculate the total cost (TC) of producing the units, which is given as \$160.00$ in this problem.
3. Determine the profit or loss by subtracting total cost from total revenue using the formula: \(\text{Profit or Loss} = TR - TC\).
4. Interpret the result: if the value is positive, the firm makes a profit; if negative, the firm incurs a loss.
5. Express the final answer clearly as either a profit or a loss with the corresponding dollar amount.