-Fast Copy Is a Perfectly Competitive Firm

question 306

Multiple Choice

-Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 2 cents per page, what is Fast Copy's economic profit?

• A) zero
• B) between 0 and $0.50 per hour
• C) between $0.51 and $1.00 per hour
• D) more than $1.00 per hour

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Definitions:

Normal Capacity

The average level of operational output that a company can sustain with its current resources, under normal conditions over a certain period.

Production

The process of creating, manufacturing, or enhancing products or services, often involving both labor and machinery.

Machine Hour

A unit of measure indicating the time a machine is operated, used to allocate manufacturing overhead based on machine time.

Fixed Factory Overhead Volume Variance

The difference between the budgeted and actual fixed overhead allocated to production, based on changes in the volume of goods produced.