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At the level of profit maximisation, where the market price (P) is $5, the firm's output amount can be determined using the demand curve or
At the level of profit maximisation, where the market price (P) is $5, the firm's output amount can be determined using the demand curve or other pertinent information. Suppose the company manufactures 50 units at this pricing. The total revenue (TR) can be calculated by multiplying the price (P) by the quantity (Q), which in this case is $5 multiplied by 50, resulting in a total revenue of $250. The total variable cost (TVC) is calculated by multiplying the marginal cost (MC) by the quantity (Q), resulting in $5 * 50 = $250. The total cost (TC) is equal to the sum of the total variable cost (TVC) and the total fixed cost (TFC), which is $250 (TVC) + $100 (TFC) = $350. The profit () is calculated by subtracting the total cost (TC) from the total revenue (TR), resulting in a value of -$100. Conclusion: In this scenario, the firm is experiencing a deficit of $100 at the output level that maximises profit
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