Assume the XYZ Corporation Is Producing 20 Units of Output

question 32

Multiple Choice

Assume the XYZ Corporation is producing 20 units of output.It is selling this output in a perfectly competitive market at $10 per unit.Its fixed costs are $100 and its average variable cost is $3 at 20 units of output.On the basis of this information we can say that the corporation:

• A)should close down in the short run
• B)is maximizing its profits
• C)is realizing an economic loss of $60
• D)is realizing an economic profit of $40
• E)is realizing an economic profit of $60

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Definitions:

Common Size Statements

Financial statements that present all line items as percentages of a common base figure rather than in absolute numbers, facilitating comparison across periods and companies.

Statement of Comprehensive Income

A financial statement that includes all changes in equity not resulting from interactions with shareholders, in addition to traditional net income.

Statement of Financial Position

A financial statement that shows the assets, liabilities, and equity of a company at a specific point in time, also known as a balance sheet.

Account Receivable

is money owed to a company by its customers for products or services that have been delivered but not yet paid for.