Recall the Application About the Break-Even Price for Growing Switchgrass

question 83

Multiple Choice

Recall the Application about the break-even price for growing switchgrass, a perennial grass that is native to the U.S. plains states and is used to create biofuel, to answer the following question(s) .
-Recall the Application. If the minimum average total cost for switchgrass farmers is $55 per ton and the minimum average variable cost is $40 per ton, then at a price of $50 per ton in the short run the switchgrass farmer will

• A) shut down, that is bring no switchgrass to market.
• B) operate and lose money.
• C) make a zero economic profit.
• D) make a positive economic profit.

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Definitions:

With Recourse

A term indicating that if the primary party defaults on an obligation, the lender or third party has the right to seek repayment from the signer of the instrument.

Factoring Without Recourse

A financial transaction where a business sells its invoices to a third party without the obligation of repurchase if the invoices go unpaid.

Bad Receivables

Amounts owed to a company that are unlikely to be paid by the debtor, often due to financial difficulty.

Troubled Debt Restructuring

A process where terms of an existing debt are modified due to the debtor's inability to pay, often resulting in reduced interest rates or extended payment terms.