A Perfectly Competitive Firm Sells 15 Units of Output at the Going

question 2

Multiple Choice

A perfectly competitive firm sells 15 units of output at the going market price of $10.Suppose its average fixed cost is $15 and its average variable cost is $8.Its contribution margin (i.e.,contribution to fixed cost) is

• A)$30.
• B)$150.
• C)$105.
• D)Cannot be determined from the above information

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Definitions:

Total Utility

The absolute gratification obtained from the utilization of a designated complete quantity of a good or service.

Total Utility

The total satisfaction received from consuming a certain amount of a good or service.

Marginal Utility

The supplementary value or usefulness experienced from consuming one more unit of a good or service.

Consumer Surplus

The discrepancy between the amount consumers are prepared to pay for a product or service and the actual price they pay, symbolizing the advantage to consumers.