Assume the XYZ Corporation is producing 35 units of output. It is selling this output in a purely competitive market at $20 per unit. Its total fixed costs are $150 and its average variable cost is $12 at 35 units of output. This corporation
A)should close down in the short run.
B)is maximizing its profits.
C)is realizing an economic profit of $280.
D)is realizing an economic Profit of $130.

Question

Quizplus · Accepted Answer

The total revenue is $700 (35 units x $20), total variable cost is $420 (35 units x $12), and total cost is $570 ($420 + $150 fixed costs). The economic profit is $130 ($700 - $570).

Assume the XYZ Corporation Is Producing 35 Units of Output