Assume the XYZ Corporation Is Producing 20 Units of Output

question 75

Multiple Choice

Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation

• A) should close down in the short run.
• B) is maximizing its profits.
• C) is realizing a loss of $60.
• D) is realizing an economic profit of $40.

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Definitions:

Protectionism

Economic policy of restricting imports from other countries through methods such as tariffs and import quotas, aimed at protecting domestic industries.

Consolidated Statements

Financial statements that aggregate the financial position and operations of a parent company and its subsidiaries, showing the financial results of the entire group as a single entity.

Future Date

A specified date that is set in the future, relevant in contexts such as finance for contracts or planning events.

Translation Loss

A decrease in the value of a company's assets or income due to changes in exchange rates when consolidating financial statements of subsidiaries in foreign currencies.