Assume that the market demand for pens is given by QD = 650 - 25P ...

[segrsyd]

Assume that the market demand for pens is given by QD = 650 - 25P and the market supply of pens is given by QS = 200 + 20P. If a firm sells 20 pens and faces an average total cost of 6, calculate the firm's profit.
 
  What will be an ideal response?

Question 2

When do Federal Reserve notes become part of the money supply (M1)? When they are
 
  A) deposited in the vaults of commercial banks.
  B) printed by the Bureau of Engraving.
  C) received by the Federal Reserve Banks.
  D) spent by the public on newly-produced goods.
  E) withdrawn from commercial banks by the public.

[batool]

Answer to Question 1

To determine the firm's profit, it is essential to determine the equilibrium price that the firm faces. At equilibrium QD = QS or, 650 - 25P = 200 + 20P or, 450 = 45P or, P = 10.
Profits = Total revenues - Total cost
= Price  Quantity - Average total cost  Quantity
= 10  20 - 6  20
= 200 - 120
= 80

Answer to Question 2

E

[segrsyd]

Thank you

[batool]

No problemo