Recall the Application About the Break-Even Price for Growing Switchgrass

question 159

Multiple Choice

Recall the Application about the break-even price for growing switchgrass, a perennial grass that is native to the U.S. plains states and is used to create biofuel, to answer the following question(s) .
-Recall the Application. If the minimum of average variable cost for switchgrass farmers is $40 per ton and the current price is $35 per ton, in the long-run the switchgrass farmer will:

• A)exit the industry.
• B)operate losing money.
• C)make a positive economic profit.
• D)make a zero economic profit.

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Definitions:

Production Budget

An estimation of the number of units that must be produced in a given period to meet both sales and inventory needs.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Budgeted Sales

Projected sales for a future period, estimated based on market analysis, historical data, and anticipated market conditions.

Ending Inventory

The aggregate value of merchandise ready for purchase at the conclusion of a financial period.