Answer the question on the basis of the following cost data for a firm that is selling in a purely competitive market. Total Output Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost
1 $150.00 $25.00 $175.00 $25.00
2 75 23 98 21
3 50 20 70 14,00
4 37.5 21 58.5 24
5 30 23 53 31
6 25 25 50 35
7 21.43 28 49.43 46.01
8 18.75 33 $1.76 68.07
9 16.67 48 55.67 86.95
10 15 39 63 128.97

1. Refer to the data. If the market price for this firm's product is $24, it will produce:

a. the law of diminishing returns.
b. the law of diminishing marginal utility.
c. diseconomies of scale.
d. economies of scale.

2. Refer to the above data. At 6 units of output, total fixed cost is and total cost is

a. $25; $50.
b. $50; $300.
c. $100; $200.
d. $150; $300.

3. Refer to the above data. At 3 units of output, total variable cost is and total cost is
a. $20; $70.
b. $60; $210.
c. $20; $210.
d. $60; $350.

Benton company (bc), a calendar year entity, has one owner, who is in the 37% federal income tax bracket (any net capital gains or dividends would be taxed at a 20% rate). bc's gross income is $395,000, and its ordinary trade or business deductions are $245,000. ignore the standard deduction (or itemized deductions) and the deduction for qualified business income. if required, round computations to the nearest dollar. a. bc is operated as a proprietorship, and the owner withdraws $100,000 for personal use. bc's taxable income for the current year is $ , and the tax liability associated with the income from the sole proprietorship is $ . b. bc is operated as a c corporation, pays out $100,000 as salary, and pays no dividends to its shareholder. bc's taxable income for the current year is $ , and bc's tax liability is $ . the shareholder's tax liability is $ . c. bc is operated as a c corporation and pays out no salary or dividends to its shareholder. bc's taxable income for the current year is $ , and bc's tax liability is $ . d. bc is operated as a c corporation, pays out $100,000 as salary, and pays out the remainder of its earnings as dividends. bc's taxable income for the current year is $ , and bc's tax liability is $ .

5. profit maximization and shutting down in the short run suppose that the market for polos is a competitive market. the following graph shows the daily cost curves of a firm operating in this market. 0 2 4 6 8 10 12 14 16 18 20 50 45 40 35 30 25 20 15 10 5 0 price (dollars per polo) quantity (thousands of polos) mc atc avc for each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. assume that if the firm is indifferent between producing and shutting down, it will produce. (hint: you can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) price quantity total revenue fixed cost variable cost profit (dollars per polo) (polos) (dollars) (dollars) (dollars) (dollars) 12.50 135,000 27.50 135,000 45.00 135,000 if the firm shuts down, it must incur its fixed costs (fc) in the short run. in this case, the firm's fixed cost is $135,000 per day. in other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). this firm's shutdown price—that is, the price below which it is optimal for the firm to shut down—is per polo.

Sonic corp. manufactures ski and snowboarding equipment. it has estimated that this year there will be substantial growth in its sales during the winter months. it approaches the bank for credit. what is the purpose of such credit known as? a. expansion b. inventory building c. debt management d. emergency maintenance