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31 January, 21:11

Wenqin is a farmer, and in the short run she produces 100 bushels of wheat. Her average total cost per bushel is $1.75, total revenue is $450, and total fixed costs are $100. Wenqin's: Select one:

a. average fixed cost is $1.50.

b. economic profit is $250.

c. profit per bushel is $2.75.

d. average variable cost is $1.25.

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  1. 31 January, 21:14
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    c. profit per bushel is $2.75.

    Explanation:

    Let's calculate all of the parameters presented in the alternatives and compare to the real values:

    Units sold = 100

    Total cost per unit = $1.75

    Total revenue = $450

    Total fixed costs = $100

    Average fixed cost = $100/100 = $1.00

    Economic profit = $450 - ($1.75*100) = $275

    Profit per bushel = $275/100 = $2.75

    Average variable cost = $1.75 - $1.00 = $0.75

    Therefore, the only alternative that presents correct values is c. profit per bushel is $2.75
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