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14. We know that the firm will produce 8 units of output when price = $20 so total revenue must be 8 x 20 = $160. We can easily see that at 8 units of output ATC is 15, so total cost must be 8 x 15 = $120. The difference between these two is $40. Profit is shown as the shaded area to the right.
Another way to compute profit is to find the difference between average revenue (price) and average cost per unit or 20 - 15 = 5. This is the average profit per unit so total profit is average profit times output or 5 x 8 = 40.
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