Scenario 14-1 Assume a Certain Firm in a Competitive Market Is Producing

question 109

Multiple Choice

Scenario 14-1
Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit.
-Refer to Scenario 14-1. At Q = 1,000, the firm's profits equal

• A)−$200.
• B)$1,000.
• C)$3,000.
• D)$4,000.

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Definitions:

Annual Net Cash Flows

The total amount of money that flows into and out of a business over a year, after all revenues are collected and expenses are paid.

Marginal Tax Rate

The rate at which an additional dollar of income is taxed, indicating the tax impact on your next dollar earned.

Depreciation

The accounting method of allocating the cost of a tangible or physical asset over its useful life.

Net Investment

The difference between total investments and the depreciation on those investments over a period, representing the increase in value of an asset.