Final answer:
At a quantity of 40 and a price of $16, the firm's total profits are $60.
Step-by-step explanation:
To calculate total profit or loss, we would need to know the firm's total revenue, which is the product of the price and quantity sold (in this case, $30 multiplied by the quantity), and then we need to subtract the total costs from this figure. Once the firm has chosen price and quantity, it's in a position to calculate total revenue, total cost, and profit. At a quantity of 40, the price of $16 lies above the average cost curve, so the firm is making economic profits. From Table 10.1 we can see that, at an output of 40, the firm's total revenue is $640 and its total cost is $580, so profits are $60. Profits are total revenues minus total costs, which is the shaded area above the average cost curve.