Exhibit 8-6 -At Output Level a in Exhibit 8-6

question 185

Multiple Choice

Exhibit 8-6
-At output level a in Exhibit 8-6

• A) a loss would be incurred
• B) positive economic profit would be earned
• C) economic profit would be zero
• D) economic profit would be smaller than at point e
• E) the firm cannot cover its fixed cost

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Definitions:

Fixed Costs

Business expenses that remain constant regardless of the level of goods or services produced.

Unit Variable Cost

The financial outlay linked to the creation of one more unit of a product.

Break Even

The point at which total costs and total revenue are equal, meaning that a business or investment is neither making a profit nor a loss.

Fixed Costs

Fixed costs are business expenses that do not change regardless of the level of goods or services produced, such as rent, salaries, and insurance premiums.