Answer the Question on the Basis of the Following Cost

question 56

Multiple Choice

Answer the question on the basis of the following cost data for a firm that is selling in a purely competitive market. $\begin{array}{ccccc}& \text { Average } & \text { Average } & \text { Average } & \\\text { Total } & \text { Fixed } & \text { Variable } & \text { Total } & \text { Marginal } \\\text { Output } & \text { Cost } & \text { Cost } & \text { Cost } & \text { Cost }\\\hline1 & \$ 150.00 & \$ 25.00 & \$ 175.00 & \$ 25.00 \\2 & 75.00 & 23.00 & 98.00 & 21.00 \\3 & 50.00 & 20.00 & 70.00 & 14.00 \\4 & 37.50 & 21.00 & 58.50 & 24.00 \\5 & 30.00 & 23.00 & 53.00 & 31.00 \\6 & 25.00 & 25.00 & 50.00 & 35.00 \\7 & 21.43 & 28.00 & 49.43 & 46.01 \\8 & 18.75 & 33.00 & 51.76 & 68.07 \\9 & 16.67 & 39.00 & 55.67 & 86.95 \\10 & 15.00 & 48.00 & 63.00 & 128.97\end{array}$ Refer to the data.If the market price for this firm's product is $35,it will produce:

• A) 6 units at a loss of $150.
• B) 6 units at a loss of $90.
• C) 9 units at an economic profit of $281.97.
• D) 8 units at an economic profit of $130.72.

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Definitions:

Fixed Costs

Costs that do not vary with the volume of output, such as rent, salaries, and insurance.

Target Net Profit

The desired bottom-line profit that a company aims for after all expenses have been subtracted from revenue.

Safety Margin

The difference between your actual or projected sales and the sales level needed to break even.

Tax Rate

The percentage at which an individual or corporation is taxed by the government, which can vary based on income level, type of income, or legal entity type.