A Price-Taker Firm Is Currently Producing 50 Units of Output

question 130

Multiple Choice

A price-taker firm is currently producing 50 units of output at an average total cost of $3 per unit. If the market price is $7, then the firm's total economic profit is

• A) $4.
• B) $150.
• C) $200.
• D) $350.

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Definitions:

Economic Value Added

A measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit.

Opportunity Cost Of Capital

The potential return that is forfeited when one investment is chosen over another.

Return On Assets

A measure of a corporation's profitability, indicating how efficient it is in using its assets to produce profit.

Capital Base

The amount of capital that a company or financial institution has available for conducting its operations, typically consisting of equity and debt.