Question

1.    A perfectly competitive firm produces 100 units of a good and the market price per unit of good is Birr 18. If the given firm is known to earn a normal profit of Birr 6 per unit, how much is the firm’s total cost of production at this level? 

Answer 1

Normal profit =[ Total revenue - Total cost]

Hence

Total revenue is $=18×100=1800$

Normal profit is $=6×100=600$

so Total cost is $=1800-600=1200$