competitive
women, running, race @ Pixabay

It is easy to be confused by the high-level numbers in economic data. This article will focus on the cost of production for a competitive producer, and the implications that it has for our understanding of how markets work. Gross revenue: 100 Cost of goods sold: 80 Operating expenses: 20 Net income before taxes and interest expense on loans = Net operating profit (or loss) -20.00% with a negative sign indicates a net operating loss in this case. This is the return that an average company would have if it were to operate at these rates for one year, given assumptions about growth rate, inflation rate, etc. Gross margin or gross profits are calculated as revenues minus cost of goods consumed during production- so 25%. For our purposes we will focus only on costs related to producing the product itself rather than other factors such as marketing and advertising expenditures which can be significant.” The article continues by explaining how competitive producers make

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