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Unformatted text preview: ideal quantity as q*. The shaded region is the amount of profit that the firm generates: Figure %: Calculating Profit The amount of profit will appear as a rectangle whose length is the distance between average cost and average revenue (since that reflects the average amount gained per unit) and whose width is the number of units sold. To calculate the actual amount of the profits, you would multiply the length (dollars per unit) and the width (quantity) of the shaded rectangle. It is possible for profits to be negative (in the case that the "profit" rectangle is above the average revenue curve, instead of below it....
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- Fall '08