Answer the Question on the Basis of the Following Cost

question 50

Multiple Choice

Answer the question on the basis of the following cost data for a firm that is selling in a purely competitive market: $\begin{array}{c}\begin{array}{c}\\Total\\Product\\\hline1 \\2 \\3 \\4 \\5 \\6 \\7 \\8 \\9 \\10 \\11 \\12\end{array}\begin{array}{lll}Average\\Fixed\\Cost\\\hline \$ 100.00 \\ 50.00 \\ 33.33 \\ 25.00 \\ 20.00 \\16.67\\ 14.29 \\ 12.50 \\ 11.11 \\ 10.00 \\ 9.09 \\ 8.33 \\\end{array}\begin{array}{lll}Average\\Variable\\Cost\\\hline \$ 17.00 \\ 16.00 \\ 15.00 \\ 14.25 \\ 14.00 \\ 14.00 \\15.71\\ 17.50 \\19.44 \\ 21.60 \\ 24.00 \\ 26.67 \end{array}\begin{array}{ccc}\text { Average }\\\text { Total } &&\text { Marginal }\\\text { Cost }&&\text { Cost }\\\hline \$ 117.00 & & \$ 17 \\66.00 & & 15 \\48.33 & & 13 \\39.25 & & 12 \\34.00 & & 13 \\30.67 & & 14 \\30.00 & & 26 \\30.00 & & 30 \\30.55 & & 35 \\31.60 & & 41 \\33.09 & & 48 \\35.00 & & 56\end{array}\end{array}$ Refer to the data.If the market price for the firm's product is $28,the competitive firm will:

• A) produce 4 units at a loss of $17.40.
• B) produce 7 units at a loss of $14.00.
• C) shut down in the short run.
• D) produce 6 units at a loss of $23.80.

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Definitions:

Condition

A specific requirement or state of affairs that must be met or exists under certain circumstances, often used in the context of sales, agreements, or health.

6 Dozen Cases

A quantity term representing 72 (6 times 12) cases of a particular item.

Forestalling

The strategy of addressing potential objections or concerns before they are raised by the prospect.

"Best Buy"

A retail company known for selling consumer electronics and appliances, offering products both in physical stores and online.