Scenario: the Fixed Cost of Producing 500 Units of Good

question 101

Multiple Choice

Scenario: The fixed cost of producing 500 units of Good Y is $25,000, while the variable cost of producing 500 units of Good Y is $60,000.
-Refer to the scenario above.Which of the following will happen if the equilibrium price charged by a firm producing Good Y in the short run is $130?

• A) The firm will earn positive economic profits and continue production.
• B) The firm will incur a loss but continue production.
• C) New firms will enter the industry in the long run.
• D) All firms will incur losses in the long run.

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Definitions:

Formal Schooling

Structured education provided typically in a classroom setting, following a prescribed curriculum.

Episodic Knowledge

Knowledge of the events we have experienced, such as what you ate for breakfast.

Family Vacation

A period of leisure and recreation spent away from home with one's family members.

Semantic Knowledge

relates to the aspect of memory that stores general knowledge about the world, including concepts, facts, and meanings.