MusicCom Is Earning a Total Revenue of $100,000 Per Year

question 81

Essay

Music.com is earning a total revenue of $100,000 per year. Its annual total fixed costs are $50,000 and its annual total variable costs are $175,000. What is the operating profit for Music.com? What is economic profit? Is this firm doing the right thing by continuing to produce in the short run? If conditions don't change what should this firm do in the long run?

---

Definitions:

Myelinated Axons

Axons that are covered by a protective sheath called myelin, which increases the speed at which nerve impulses are conducted.

Nonmyelinated Axons

Axons that lack a myelin sheath, causing them to conduct nerve impulses more slowly than myelinated axons.

Fast Nerve Fibers

Nerve cells that transmit signals rapidly, involved in the processing of information that requires quick responses, such as sharp, immediate pain or motor coordination.

Pain Sensations

The unpleasant sensory and emotional experience associated with actual or potential tissue damage or described in terms of such damage.