Use the Information Below to Answer the Following Questions

question 37

Multiple Choice

Use the information below to answer the following questions.
Fact 12.4.1
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 12.4.1. 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.

Understand the concept of accounting and economic profits and their differences.

Comprehend the effects and effectiveness of usury laws on the interest rates and loan markets.

Analyze the role of economic profit in competitive equity, innovation, and risk management.

Interpret data from tables related to market equilibrium, interest rates, and loanable funds.

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Definitions:

Equalized Workload Method

A management strategy where tasks and responsibilities are distributed among team members in a way that ensures an equitable share of workload and prevents burnout.

Market Potential

The maximum total sales of a product or service that all sellers could achieve in a specific market segment during a certain time period, under ideal conditions.

Sales Management

The practice of directing and controlling sales operations and teams to achieve set sales targets and objectives.

Social Media

Internet-based applications that enable users to create their own content and share it with others who access these sites.