A Firm That Sells a Single Product Had a Beginning

question 53

Multiple Choice

A firm that sells a single product had a beginning inventory of 5,000 units with a total cost of
$35,000. Early in the year, 12,000 units were purchased at $9 each. Using FIFO, what is the value of the ending inventory of 4,000 units?

• A)$27,000
• B)$24,000
• C)$21,000
• D)$36,000

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Definitions:

Perfect Price Discrimination

The act of charging each consumer the maximum price that they are willing to pay for a product, thereby capturing the entire consumer surplus.

Consumer Surplus

The disparity in the consumers' desired payment amount for a good or service and the actual expense they bear.

Natural Monopoly

A market condition where a single firm can supply a product or service at a lower cost than any potential competitor, often due to economies of scale.

Large Fixed Costs

Expenses that do not change in total regardless of changes in the volume of goods or services produced.