Asked by
Griffin Parriott
on Dec 19, 2024
Verified
Assume the XYZ Corporation is producing 35 units of output. It is selling this output in a purely competitive market at $20 per unit. Its total fixed costs are $150 and its average variable cost is $12 at 35 units of output. This corporation
A) should close down in the short run.
B) is maximizing its profits.
C) is realizing an economic profit of $280.
D) is realizing an economic Profit of $130.
Average Variable Cost
The total variable cost divided by the quantity of output produced; it is the cost of producing an additional unit of a good or service.
Purely Competitive
Market structures characterized by many buyers and sellers, where no single entity has the market power to influence the price of a homogeneous product.
- Determine the impact of fixed and variable costs on a firm's profit.
- Explore the processes involved in setting prices and outputs in purely competitive markets.
- Discover the factors that contribute to a firm's optimal profit or minimal loss in a short timeframe.
Verified Answer
PN
Learning Objectives
- Determine the impact of fixed and variable costs on a firm's profit.
- Explore the processes involved in setting prices and outputs in purely competitive markets.
- Discover the factors that contribute to a firm's optimal profit or minimal loss in a short timeframe.