Use the Following to Answer Question

question 57

Multiple Choice

Use the following to answer question:
-(Figure: Revenues,Costs,and Profits for Tomato Producers III) Use Figure: Revenues,Costs,and Profits for Tomato Producers III.The market for tomatoes is perfectly competitive.If the market price of a bushel of tomatoes is $18,this farm will:

• A)minimize its losses by shutting down.
• B)minimize its losses by continuing to produce.
• C)break even.
• D)earn an economic profit.

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Definitions:

Capital Lease

A lease classified as a purchase by the lessee, where the asset is accounted for on the lessee’s balance sheet as an asset.

Effective-Interest Method

A method of calculating the amortized cost of a bond and the interest expense over the life of the bond by applying a constant interest rate to the carrying value of the bond.

GAAP

Stands for Generally Accepted Accounting Principles, which are the standard framework of guidelines for financial accounting in a particular jurisdiction.

Straight-Line Method

A method of depreciation where an asset's cost is evenly reduced over its useful life.