Economic Profit or Loss Calculation

Economic Profit or Loss Calculation
Q											Alternative Formula
Output	FC	AFC=FC/Q	VC	AVC = VC/Q	ATC=AFC+AVC	TC=FC+VC	MC= ∆ TC/ ∆ Q	MR=P	TR=PXQ	Economic Profit = TR – TC	Profit = (P-ATC)XQ
0	100					100.00
1	100	100.00	90	90.00	190.00	190.00	90.00	131
2	100	50.00	170	85.00	135.00	270.00	80.00	131
3	100	33.33	240	80.00	113.33	340.00	70.00	131
4	100	25.00	300	75.00	100.00	400.00	60.00	131
5	100	20.00	370	74.00	94.00	470.00	70.00	131
6	100	16.67	450	75.00	91.67	550.00	80.00	131
7	100	14.29	540	77.14	91.43	640.00	90.00	131
8	100	12.50	650	81.25	93.75	750.00	110.00	131
9	100	11.11	780	86.67	97.78	880.00	130.00	131
10	100	10.00	930	93.00	103.00	1030.00	150.00	131


Output	AFC=FC/Q	FC	AVC = VC/Q	VC	ATC=AFC+AVC	TC=FC+VC	MC= ∆ TC/ ∆ Q	MR=P	TR=PXQ	Economic Profit = TR – TC
0		100				100.00
1	100.00	100	90.00	90	190.00	190.00	90.00	81.00			Market price is $81 instead of $131.
2	50.00	100	85.00	170	135.00	270.00	80.00	81.00			Should the firm still produce?
3	33.33	100	80.00	240	113.33	340.00	70.00	81.00			If so, how much?
4	25.00	100	75.00	300	100.00	400.00	60.00	81.00
5	20.00	100	74.00	370	94.00	470.00	70.00	81.00
6	16.67	100	75.00	450	91.67	550.00	80.00	81.00
7	14.29	100	77.14	540	91.43	640.00	90.00	81.00
8	12.50	100	81.25	650	93.75	750.00	110.00	81.00
9	11.11	100	86.67	780	97.78	880.00	130.00	81.00
10	10.00	100	93.00	930	103.00	1030.00	150.00	81.00


Output	AFC=FC/Q	FC	AVC = VC/Q	VC	ATC=AFC+AVC	TC=FC+VC	MC= ∆ TC/ ∆ Q	MR=P	TR=PXQ	Economic Profit = TR – TC
0		100				100.00
1	100.00	100	90.00	90	190.00	190.00	90.00	71.00
2	50.00	100	85.00	170	135.00	270.00	80.00	71.00			Market price is $71 instead of $131.
3	33.33	100	80.00	240	113.33	340.00	70.00	71.00			Should the firm still produce?
4	25.00	100	75.00	300	100.00	400.00	60.00	71.00			If so, how much?
5	20.00	100	74.00	370	94.00	470.00	70.00	71.00
6	16.67	100	75.00	450	91.67	550.00	80.00	71.00
7	14.29	100	77.14	540	91.43	640.00	90.00	71.00
8	12.50	100	81.25	650	93.75	750.00	110.00	71.00
9	11.11	100	86.67	780	97.78	880.00	130.00	71.00
10	10.00	100	93.00	930	103.00	1030.00	150.00	71.00

Extra Credit

Output	AFC=FC/Q	AVC = VC/Q	ATC=AFC+AVC	TC = ATC*Q	MC= ∆ TC/ ∆ Q	P=MR	Profit = (P-ATC)XQ
0
1	60.00	45.00	105.00			56
2	30.00	42.50	72.50			56
3	20.00	40.00	60.00			56
4	15.00	37.50	52.50			56
5	12.00	37.00	49.00			56
6	10.00	37.50	47.50			56
7	8.57	38.57	47.14			56
8	7.50	40.63	48.13			56
9	6.67	43.33	50.00			56
10	6.00	46.50	52.50			56

If P = $56, will this firm produce in the short run?
If so, what will be the profit-maximizing or loss-minimizing output?
What economic profit or loss will the firm realize per unit of output?

If P= $30, repeat those previous questions.				Replace 56 in column G by 30 and see.


If P= $41, repeat those previous questions.				Replace 56 in column G by 41 and see.

Economic Profit or Loss Calculation

Rawl’s “fairness principle

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