By examining the spreadsheet below, what part of the financial plan might be missing?

Assume a purely competitive firm is selling 200 units of output at $3 each. At this output, its total fixed cost is $100 and its

raketka [301]

The correct option is: maximizing its profit, but not necessarily the maximum profit.

<h3>What is Profit Maximization in a Perfectly Competitive Market ?</h3>

The perfectly competitive firm can choose to sell any quantity of output at exactly the same price. This implies that the firm faces a perfectly elastic demand curve for its product: buyers are willing to buy any number of units of output from the firm at the market price.

When the perfectly competitive firm chooses what quantity to produce, then this quantity—along with the prices prevailing in the market for output and inputs—will determine the firm’s total revenue, total costs, and ultimately, level of profits.

A perfectly competitive firm has only one major decision to make—namely, what quantity to produce. To understand why this is so, consider the basic definition of profit:

Profit=Total revenue−Total cost

(Price) (Quantity produced)−(Average cost) (Quantity produced)

According the question scenario,

Given:

Firm is selling = 200 units

output = $3 each

fixed cost = $100

variable cost = $350

solution:

Total average cost = variable cost + fixed cost .........(1)

Total average cost = 350 + 100

Total average cost = $450

Cost per unit = average cost ÷ no of unit ...................(2)

Cost per unit = 450 ÷ 200

Cost per unit = $2.25

So here firm is incurring per units is $2.25 but here earning per unit is $3.

So that here firm is earning economic profit as here market price is greater than earning maximum profit.

Therefore, we can conclude that the correct option is : maximizing its profit, but not necessarily the maximum profit.

Learn more about Profit Maximization on:

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8 0

2 years ago

XYZ Company makes 400 widgets. The variable costs are $35.60 per unit and fixed costs are $30.00 per unit; however, $21.40 in fi

Anuta_ua [19.1K]

Answer:

increase in income of $80

Explanation:

Prepare an Analysis of Costs and Savings if the Company buys from Outside Supplier.

Note : The fixed costs per unit at are unavoidable are irrelevant and disregarded in this decision.

Analysis of Costs and Savings

Purchase Price (400 widgets × $44.00) = ($17,600)

Savings :

Variable Costs ($35.60 × 400 widgets) = $14,240

Fixed Cost ( $8.60 × 400 widgets) = $3,440

Net Income effect = $80

Conclusion :

The effect on net income if the company instead buys the widgets is an increase in income of $80

3 0

4 years ago

The state government decentralizes power by assigning many functions to units of local government, especially _____.

Evgen [1.6K]

The state government decentralizes power by assigning many functions to units of local government, especially: Counties

Counties has the authority to handle various forms of administrative task and spreaded all over the nations so it will be easily accessible for the citizens from all states.

3 0

3 years ago

Baby alec continues to fuss for over 5 minutes when his brother takes away a toy that he enjoys playing with. this can be used a

Vitek1552 [10]

The fact that baby Alec continues to fuss for over 5 minutes when his brother takes away a toy that he enjoys playing with is an example of object permanence. The object permanence is used to describe a developmental milestone in infants. According it babies know that objects continue to exist even when they cannot be observed.

7 0

3 years ago

One qualitative forecasting method bases the forecast for a new product or service on the actual sales history of a similar prod

Harrizon [31]

Answer:

Life cycle analogy method

Explanation:

Life cycle analogy method A qualitative forecasting technique that attempts to identify the time frames and demand levels for the introduction, growth, maturity, and decline life cycle stages of a new product

4 0

3 years ago