# 500 per week that he earned at his coaching position

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\$500 per week that he earned at his coaching position. Sergio's business is good; he averages 100 pairs of skates per week, and charges \$8 per pair to sharpen skates. He does all of the work himself, but has to pay the rink \$150 per week for the lease on the equipment. Is Sergio better off operating his own business? Yes, he is now earning an economic profit of \$150 per week. No, he is only earning \$150 per week. No, he should have stayed at the coaching position where he earned \$500 per week. Yes, he is earning an economic profit of \$800 each week. CONCEPT
Economic Profit 17 Using the graph above, the firm is best served producing at __________. CONCEPT
Production Function and Constraints 18
If the goal is to maximize profit, at which point on the graph would a firm’s output be optimized? CONCEPT
Output Optimization: Marginal Revenue / Marginal Cost 19 The additional income a company generates from selling one more unit due to this is called which of the following? CONCEPT
Revenue: Total, Marginal and Average 20 Which of the following is true about marginal cost? Marginal cost is the change in total cost that results from a single unit increase in the quantity produced. In the long run, every firm’s marginal cost must equal zero. The marginal cost will consistently fall with an increase in production.
Marginal cost can be found at the intersection of a firm's budget constraints and production function. CONCEPT
Cost: Total, Marginal and Average 21 If the variable costs for a firm are \$57, the fixed costs are \$143, and the firm sells 40 units, what are the firm's average total costs? CONCEPT
Cost: Total, Marginal and Average