A Firm Has Operating Profit of $15,000 on Unit Sales

question 13

Multiple Choice

A firm has operating profit of $15,000 on unit sales of 10,000 units. Fixed costs are $30,000. What is the firm's break-even in units?

• A) Less than 6,000 units.
• B) 6,000 units.
• C) More than 6,000 units
• D) There is not enough information to determine the unit break-even point.

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Definitions:

Zero Economic Profits

A condition in perfect competition where firms earn just enough revenue to cover their total costs, leading to no supernormal profit in the long term.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for significant brand differentiation and some control over prices.

Long Run

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

Average Total Cost Curve

A graphical representation showing how average cost changes with changes in output.