Question

Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $4 at 20 units of output. This corporation_______
a. shouldclose down in the short run.
b. is maximizing its profits.
c. is realizing a loss of $60.
d. is realizing an economic profit of $40.

Answer 1

Answer:

d. is realizing an economic profit of $40.

Explanation:

Calculation to determine what This corporation is realizing as economic profit

Using this formula

Economic profit =Total fixed costs-(Average variable cost )

Let plug in the formula

Economic profit =$100-($3*20)

Economic profit =$100-$60

Economic profit =$40

Therefore This corporation is realizing an economic profit of $40