A firm operating in pure competition receives $45 for each unit of output sold. It has a variable cost of $25 per item and a fixed cost of $1600, what is its profit level π if it sells 150 items?

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marvineetesh3 marvineetesh3 · Answer 1 · 2022-05-27T07:16:14+02:00

The profit level π if it sells 150 items is $1,400.

A variable cost is a business expense that fluctuates depending on how much the organization produces or sells.

From the given information, suppose that

π = Profit

C(x) = Cost

R(x) = Revenue, and

x = Number of Items sold

Now, as we know, the formula of profit will be:

π = R(x)-C(x)

As per the given information,

R(x) = 45x

C(x) = 25x + $1600

Now, the required π Function = (45x) – (25x + $1,600)

Then, the profit level π if it sells 150 items will be:

π = 45(150) – 25 (150) +$1600

π =$6,750–$5,350

π =$1,400

Therefore, the profit level π if it sells 150 items is $1,400.

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