Suppose a Perfectly Competitive Ukulele Factory Can Produce 35 Ukuleles

question 379

Multiple Choice

Suppose a perfectly competitive ukulele factory can produce 35 ukuleles at an output at which marginal cost equals marginal revenue. The price per ukulele is $1300 and the average total cost is $1500. What is the profit or loss that this furniture factory is earning?

• A) $700.00
• B) -$7,000.00
• C) -$1,050.00
• D) -$450.00

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Definitions:

ATC Curve

Short for Average Total Cost Curve, it's a graphical representation used in economics to show how the average total cost of producing a good varies with the level of output.

Proportional Returns

The concept that the rate of return on an investment or project is consistent relative to the size of the investment.

Parkinson's Law

A principle stipulating that work expands to fill the time available for its completion.

Specialization

The process of concentrating on and becoming expert in a particular subject or skill, often leading to increased efficiency.