Question

Bobby decides to sell lemonade on a hot summer day. If Bobby sells 25 glasses of lemonade for $0.30 per cup, and his average total cost is $0.26, what are Bobby's economic profits for the day?

Answer 1

Answer:

$1

Explanation:

The computation of the economic profit is shown below:

Economic profit = Total revenue - Total cost

where,

Total revenue is

= Price × Quantity

= $0.30 × $25

= $7.5

And, the total cost is

= Price × Quantity

= $0.26 × $25

= $6.5

So, the economic profit is

= $7.5 - $6.5

= $1

It shows a difference between the total revenue and the total cost