Use the Information Below to Answer the Following Questions

question 40

Multiple Choice

Use the information below to answer the following questions.
Fact 11.4.1
Franklin is a fiddlehead farmer.He sold 10 bags of fiddleheads last month,with total fixed cost of $100 and total variable cost of $50.
-Refer to Fact 11.4.1.Suppose the price of fiddleheads is expected to stay at $10 per bag for the foreseeable future,and Franklin's production and cost figures are expected to stay the same.His total fixed cost consists entirely of rent on land,and his five-year lease on the land runs out at the end of the month.Should Franklin renew the lease?

• A)Yes,because total revenue will still cover total fixed cost.
• B)Yes,because total revenue will still cover total variable cost and a portion of total fixed cost.
• C)No,because total revenue must cover all costs for factors of production to remain in fiddlehead farming in the long run.
• D)No,because in the long run,zero economic profit is a signal to move factors of production out of fiddlehead farming.
• E)Insufficient information to answer.

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Definitions:

Established Measures

Validated and widely accepted tools or instruments used to assess or measure specific variables in research.

Validity

The degree to which a research study or testing instrument accurately measures what it intends to measure.

Interval Measures

A scale of measurement where the difference between any two consecutive measures is the same, but it does not have a true zero point, e.g., temperature scales.

Equal Intervals

A measurement scale where the difference between values is the same across the scale.