What Is the Level of Profits for a Firm in Which

question 16

Multiple Choice

What is the level of profits for a firm in which DOL = 5 and fixed costs including depreciation = $300,000?

• A) $60,000
• B) $75,000
• C) $1,200,000
• D) $1,500,000

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Definitions:

Short Run

A period of time in economics during which at least one input, such as plant size or capital, remains fixed while others may vary.

Long Run

A period during which all factors of production and costs are variable, allowing for full adjustment to changes.

Perfect Competition

Perfect competition is a market structure where many firms offer a homogeneous product or service, and no single firm can influence the market price.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded by consumers over a range of prices.