Answer:
The firm will be having a negative profit of - $700.
Explanation:
The equilibrium price of the product is $3/unit.
The equilibrium quantity is 100 units.
The total fixed cost is $500 and total variable cost is $600.
The average variable cost is
= [tex]\frac{TVC}{Q}[/tex]
= [tex]\frac{600}{100}[/tex]
= $6
The price is not covering the average variable cost, this implies that the firm is having a loss.
The economic profit will be
= TR -TC
= [tex]\$ 3\ \times\ 100\ -\ (\$ 400\ +\ \$ 600)[/tex]
= $300 - $1,000
= -$700
