Multiple Choice
To calculate profit, producers subtract their total production cost from their:
57
views
10. The Costs of Production
Revenue, Cost, and Profit
Struggling with Microeconomics?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following correctly represents the profit equation for a firm?
A
Profit = Total Revenue \times Total Cost
B
Profit = Total Revenue + Total Cost
C
Profit = Total Cost - Total Revenue
D
Profit = Total Revenue - Total Cost
Verified step by step guidance1
Step 1: Understand the definition of profit in microeconomics. Profit is the difference between the total revenue a firm earns from selling its goods or services and the total cost incurred in producing those goods or services.
Step 2: Recall the formula for total revenue (TR), which is the price per unit multiplied by the quantity sold: \(TR = P \times Q\).
Step 3: Recall the formula for total cost (TC), which includes all costs of production, both fixed and variable.
Step 4: Write the profit equation by subtracting total cost from total revenue: \(\text{Profit} = TR - TC\).
Step 5: Compare the given options with the profit formula. The correct representation is \(\text{Profit} = \text{Total Revenue} - \text{Total Cost}\).
5:51mWatch next
Master Explicit and Implicit Cost with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Revenue, Cost, and Profit practice set
Problem sets built by lead tutorsExpert video explanations