Suppose That at the Current Level of Output, Pat's Hats

question 71

Multiple Choice

Suppose that at the current level of output, Pat's Hats has fixed costs of $500, variable costs of $1, 000, and $2, 000 in total revenue.Which of the following is true?

• A)Profit is currently $500 and, in the long run, it will be $1, 000 because there will be no fixed costs.
• B)Profit is currently $500 and, in the long run, it will be $1, 500 because there will be no variable costs.
• C)Profit is currently $500.
• D)Profit is currently $500, and Pat's Hats will want to decrease its plant size in the long run to lower its fixed costs.
• E)Pat's Hats will continue to operate as long as revenue is greater than $500.

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Definitions:

Bevel Gear

A type of gear where the axes of the two shafts intersect and the tooth-bearing faces of the gears themselves are conically shaped, often used in differential drives.

Addendum

The radial distance from the pitch circle of a gear to the top of the teeth.

Dedendum

The distance from the pitch circle of a gear to the bottom of the tooth groove.

Working Depth

Working depth pertains to the depth of engagement between two mating gears, specifically the depth to which a tooth enters into the gap between teeth on the opposing gear.