In a Perfectly Competitive Industry, There Are Two Types of Firms

question 145

Multiple Choice

In a perfectly competitive industry, there are two types of firms: low-cost producers and high-cost producers. The minimum average total cost of the high-cost producers is $150. The low-cost producers have a long-run total cost curve given by LTC = 150Q - 15Q² + 0.4Q³, where LMC = 150 - 30Q + 1.2Q². How much economic rent does the low-cost producer earn?

• A) $3,125
• B) $14,000
• C) $710
• D) $45,000

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Definitions:

Seat Occupancy

The ratio or percentage of occupied seats in a venue or vehicle to the total available.

Operating Performance

An evaluation of a company's efficiency in managing its core business activities, often measured by profitability and productivity metrics.

Fixed Manufacturing Expenses

Costs that do not vary with the level of production or sales, such as rent, salaries of permanent staff, and equipment depreciation.

Fixed Selling

Refers to selling expenses that remain constant regardless of the level of sales or production activity.