Nastasia Is 50% Owner in a Manufacturing Company That Runs

question 38

Multiple Choice

Nastasia is 50% owner in a manufacturing company that runs as an LLP. She invested $25,000 when the business started and has received no money from the business since then. The company just lost a $1,000,000 patent infringement lawsuit and will have to shut down. What is Nastasia's personal loss on this business?

• A) $0
• B) $25,000
• C) $1,000,000
• D) $1,025,000

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Definitions:

Average Total Cost

The total cost divided by the quantity produced, indicative of the cost per unit of output.

Average Fixed Cost

Fixed cost divided by output.

Variable Costs

Expenses that change in proportion to the activity of a business.

Fixed Costs

Expenses that do not change with the level of output or sales in the short term.