The Accompanying Table Gives Cost Data for a Firm That

question 320

Multiple Choice

The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $12, the competitive firm should produce

• A)4 units at an economic loss of $109.
• B)4 units at an economic profit of 31.75.
• C)8 units at an economic loss of $48.80.
• D)zero units at an economic loss of $100.

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Definitions:

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of output or production volume.

Total Costs

The overall expenditure involved in producing goods or offering services, comprising both stable and changeable costs.

Economies of Scale

The cost advantage achieved when production becomes efficient, as the scale of production increases, leading to a reduction in the average cost to make each unit.

Diseconomies of Scale

A situation where, as a firm becomes larger, its costs per unit increase due to inefficiencies that arise from its growth.