Answer:
b) -$700.
Explanation:
The economic profit or loss will be:
economic result = revenue - total cost
Where:
fixed cost + variable cost = total cost
400 + 600 = 1,000
revenue = units x selling price per unit
100 units x $3 = $300
economic result = revenue - total cost = 300 - 1,000 = -700
The company is on the optimal level, marginal revenue = marginal cost at 100 units of output.
But, it is not selling at the correct price. It should sale at a higher price.
