Consider the Following Total Cost Schedule for a Perfectly Competitive

question 75

Multiple Choice

Consider the following total cost schedule for a perfectly competitive firm producing ball- point pens. $$\begin{array}{l}\begin{array} { | l | l | l | } \hline \begin{array} { l } \text { Output } \\\text { per period }\end{array} & \text { TVC } ( \$ ) & \text { TFC } ( \$ ) \\\hline 0 & 0 & 5 \\\hline 10 & 2 & 5 \\\hline 20 & 3 & 5 \\\hline 30 & 6 & 5 \\\hline 40 & 10 & 5 \\\hline 50 & 15 & 5 \\\hline\end{array}\\\text { TABLE 9- } 3\end{array}$$
-Refer to Table 9- 3. Suppose the prevailing market price for this firm's product is $0.45. If the firm is producing 20 units of output per period, then its profit per unit is and its total profit per period is .

• A) $6; $120
• B) $0.40; $8
• C) $9; $180
• D) $0.01; $2
• E) $0.05; $1.00

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Definitions:

Alternative Investments

Assets that do not fall into the conventional investment categories such as stocks, bonds, and cash, examples include real estate, commodities, and hedge funds.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Differential Income

The difference in income between two alternatives, used in decision-making processes to determine the best option.

Alternative Use

Refers to the potential other uses or applications of an asset or resource outside its current employment.