DP Economics Questionbank

Based on the information in Figure 2, state whether the firms in this market are making normal profits, economic profits or economic losses.

Calculate the economic profit/loss when Firm A is producing at the output level identified in part (b)(i).

Using the figures provided in Table 1, calculate the monthly level of profits Firm A is making at the current level of output, Q’.

Determine:

• economic profit if output is equal to 2 units and average cost is equal to $130 per unit.

Calculate Firm B’s short-run profit/loss at the profit-maximizing level of output.

(ii) Using Figure 2, identify the quantity of cans per month Firm B must produce in order to maximize profits.

(iii) Calculate the economic profit when Firm B is producing at the output level identified in part (ii).

Assuming the event organizers aim to maximize profit, calculate the profit that will be made from the concert.