2. The profit earned by this firm is the green shaded area shown to the right. The height of this area is 3 (10-7) and the width is 5 so the area is 3 x 5 = 15. We could arrive at this in two ways:

1. Total cost is ATC x Q at 5 units of output ATC =7 so total cost is 5 x 7 = 35. Total revenue is P x Q which is 10 x 5 = 50. Profit is TR - TC = 50 - 35 = 15.