As we learned, a firm’s total cost curve in the short run intersects the vertical axis at some positive value equal to the firm’s total fixed costs Total cost then rises at a decreasing rate over the range of increasing marginal returns to the firm’s variable factors It rises at an increasing rate over the range of diminishing marginal returns Figure 9.6 "Total Revenue, Total Cost, and Economic Profit" shows the total cost curve for Mr Gortari, as well as the total revenue curve for a price of $0.40 per pound Suppose that his total fixed cost is $400 per month For any given level of output, Mr Gortari’s economic profit is the vertical distance between the total revenue curve and the total cost curve at that level Figure 9.6 Total Revenue, Total Cost, and Economic Profit Economic profit is the vertical distance between the total revenue and total cost curves (revenue minus costs) Here, the maximum profit attainable by Tony Gortari for his radish production is $938 per month at an output of 6,700 pounds Let us examine the total revenue and total cost curves in Figure 9.6 "Total Revenue, Total Cost, and Economic Profit" more carefully At zero units of Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 481