The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's total economic costs are:
A. $286,000.
B. $150,000.
C. $94,000.
D. $156,000.
Answer: A
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The marginal cost will intersect the average variable cost curve
A) when the average variable cost curve is rising. B) where average variable cost curve equals price. C) at the minimum point of the average variable cost curve. D) The two will never intersect.
Production of a good produces pollution that is very damaging with each additional unit. A monopoly facing a very elastic demand curve will most likely produce
A) less than the social optimum of the good. B) more than the social optimum of the good. C) the social optimum of the good. D) no externality.