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JAMB Economics 1995 Question 14

Question 14

Theory of Costs and Revenue

Given that TC = TFC + TVC and TR = AR x Q, profit is equal to

  1. A.(AR + Q) − TFC
  2. B.(TFC + TVC)/Q
  3. C.(AR x Q) − TC
  4. D.(TC x Q)/AR
Show the answer and explanation

Answer: C ((AR x Q) − TC)

Explanation

Profit = total revenue − total cost, and total revenue = AR × Q, so profit = (AR × Q) − TC.