Consider the Following Total Cost Schedule for a Perfectly Competitive

question 32

Multiple Choice

Consider the following total cost schedule for a perfectly competitive firm producing ball- point pens. $$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Output } \\\text { per period }\end{array} & \text { TVC } ( \$ ) & \text { TFC } ( \$ ) \\\hline 0 & 0 & 5 \\\hline 10 & 2 & 5 \\\hline 20 & 3 & 5 \\\hline 30 & 6 & 5 \\\hline 40 & 10 & 5 \\\hline 50 & 15 & 5 \\\hline\end{array}$$ TABLE 9- 3
-Refer to Table 9- 3.This firm would shut down in the short run if the market price of its output

• A)dropped below $0.15.
• B)dropped below $0.20.
• C)dropped below $0.30.
• D)dropped below $2.00.
• E)dropped below $3.00.

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Definitions:

Operating Loss

A financial metric representing the negative balance resulting from a company's operating expenses exceeding its revenues.

Variable Cost

Costs that change in proportion to the level of activity or volume of goods produced, such as raw materials and labor expenses.

Fixed Costs

Expenses that remain constant regardless of the amount of output or sales, including costs like lease payments, wages, and insurance premiums.

Break-Even Point

The financial point at which costs equal revenues, meaning there is no profit or loss.