Use the Following to Answer Question

question 101

Multiple Choice

Use the following to answer question:
-(Figure: Cost Curves for Corn Producers) Use Figure: Cost Curves for Corn Producers.The market for corn is perfectly competitive.If the price of a bushel of corn is $4,in the short run the farmer will produce _____ bushels of corn and earn an economic _____ equal to _____.

• A)0;loss;average fixed costs
• B)0;loss;total fixed costs
• C)3;loss;$30 per bushel
• D)3;profit;$20 per bushel

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Definitions:

Prior Claim

A legal right or financial obligation that takes precedence over others, typically in the context of creditors in bankruptcy proceedings.

Par Value

The nominal or face value of a stock or bond as stated by the issuing company, not necessarily reflecting its market value.

Legal Capital

Minimum amount of capital that a corporation must leave in the company (cannot be withdrawn by stockholders) for the protection of the creditors.