Use the Information Below to Answer the Following Questions

question 71

Multiple Choice

Use the information below to answer the following questions.
Fact 14.3.3
Suppose that Roots' marginal cost of a jacket is a constant $125.00 and the total fixed cost at one of its stores is $1,500 a day. This store sells 20 jackets a day, which is its profit-maximizing number of jackets. Then the stores nearby start to advertise their jackets. The Roots store now spends $2,000 a day advertising its jackets, and its profit-maximizing number of jackets sold jumps to 70 a day.
-Refer to Fact 14.3.3. In the long run, Roots' economic profit is

• A)positive.
• B)negative.
• C)zero.
• D)greater than the economic profit of its competitors.
• E)less than the economic profit of its competitors.

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Definitions:

Market Level

The current status or position of prices, stocks, or commodities within a particular market.

Systematic Risk

Market-wide or market segment-specific dangers that cannot be eliminated by diversifying one's investment portfolio.

Beta

Beta is a measure of a stock's volatility in relation to the overall market, indicating the stock's risk level compared to the market average.

Non-diversifiable Risk

A type of risk that is inherent to the entire market or market segment and cannot be eliminated through diversification.