Author Question: Differentiate between the terms revenue and profit. Assume that a firm sells 20 units of a good at a ... (Read 60 times)

sc00by25 · **on:** Jun 29, 2018

Differentiate between the terms revenue and profit. Assume that a firm sells 20 units of a good at a price of 5 per unit. If the average total cost of the firm is 3 per unit, calculate the firm's profit.

What will be an ideal response?

Question 2

What gives a demand deposit value?

A) The belief others will readily accept the demand deposit in exchange for valuable goods
B) The currency the bank holds as reserves
C) The guarantees the government provides
D) The gold backing the deposits
E) In God we trust.

kishoreddi · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

The revenue of a firm is equal to the price of the goods multiplied by the quantity of goods sold. On the other hand, the profit of a firm is equal to the difference of the revenue that a firm earns and the costs it incurs.
If a firm sells 20 units of a good at 5 each, its revenue is equal to 20 5 or 100.
If the average total cost of the firm is 3, the total cost it incurs is 20 3 or 60.
Hence, profits of the firm are 100 - 60 or 40.

Answer to Question 2

A