-The Figure Illustrates the Short-Run Costs of Paul's Picture Frames

question 139

Multiple Choice

-The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces ________ frames each week, makes ________ of total revenue, and makes zero ________ profit.

• A) 200; $4,000; economic
• B) 300; $9,000; normal
• C) 200; $4,000; normal
• D) 300; $9,000; economic

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Definitions:

Explicit Costs

Direct, out-of-pocket expenses incurred in the operation of a business or the execution of a transaction.

Production

The process or method of creating goods and services through the combination of labor, materials, and technology.

Fixed Inputs

Resources in production that remain constant in quantity regardless of the level of output or activity.

Variable Inputs

Resources used in production that vary with the level of output, such as raw materials.