Question

Suppose a firm producing coffee provides you with the following information:

Price = R100

Quantity = 150 units of coffee

Cost of production = R9 500

7.3.1. Calculate the total revenue of the firm. (1)

7.3.2. Is the firm currently making a profit or a loss? Explain. (2)

Answer 1

The total revenue of the firm is:

$TR = 100×150 = R15,000.$

Total profit is:

$TP = TR - TC = 15,000 - 9,500 = R5,500.$

So, the firm is currently making a profit.