Xavier is an accountant who provides tax services through his own firm. To provide these services he must rent an office for $14.000 per year, hire a secretary for $30,000, and spend $8,000 per year in advertising. Explicit Costs Office rent Secretary Advertising Amount $14,000 $30,000 $8,000 Xavier's total revenue from his tax services is $100,000 per year. Suppose Xavier's firm is in a perfectly competitive industry and that he could otherwise eam $48,000 per year working as an accountant in another firm. Assuming Xavier's profits are representative of the industry, describe what will likely happen to Xavier's profits in the long run. OA Xavier is breaking even and should shut down in the long run. O B. Xavier is breaking even and should continue to produce to continue breaking even in the long run. OC. Xavier is earning an economic profit and should expect to break even in the long run after the entry of new firms. OD. Xavier is incurring losses and should shut down in the long run. OE. Xavier is earning an economic profit and should continue to produce to earn these profits in the long run.

Xavier is an accountant who provides tax services through his own firm. To provide these services he must rent an office for $14.000 per year, hire a secretary for $30,000, and spend $8,000 per year in advertising. Explicit Costs Office rent Secretary Advertising Amount $14,000 $30,000 $8,000 Xavier's total revenue from his tax services is $100,000 per year. Suppose Xavier's firm is in a perfectly competitive industry and that he could otherwise eam $48,000 per year working as an accountant in another firm. Assuming Xavier's profits are representative of the industry, describe what will likely happen to Xavier's profits in the long run. OA Xavier is breaking even and should shut down in the long run. O B. Xavier is breaking even and should continue to produce to continue breaking even in the long run. OC. Xavier is earning an economic profit and should expect to break even in the long run after the entry of new firms. OD. Xavier is incurring losses and should shut down in the long run. OE. Xavier is earning an economic profit and should continue to produce to earn these profits in the long run.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Isocost and Isoprofit Curve Analysis

An isocost curve in the production theory that is a crucial part of economics depicts different combinations of factor inputs at a given market cost. In other words, this shows all the combinations of production factors that cost the same for the firm to employ. Usually, this can be depicted as a downward sloping straight line when the firms act as the price-takers in the factor markets. The slope of this mainly depicts the relative prices of different production factors.

Question

ont
bu h
Xavier is an accountant who provides tax services through his own firm. To provide these services he must rent an office for $14,000 per year,
hire a secretary for $30,000, and spend $8,000 per year in advertising.
Explicit Costs
Office rent
Secretary
Advertising
Amount
$14,000
$30,000
$8,000
Xavier's total revenue from his tax services is $100,000 per year.
Suppose Xavier's firm is in a perfectly competitive industry and that he could otherwise earn $48,000 per year working as an accountant in
another firm.
Assuming Xavier's profits are representative of the industry, describe what will likely happen to Xavier's profits in the long run.
OA. Xavier is breaking even and should shut down in the long run.
OB. Xavier is breaking even and should continue to produce to continue breaking even in the long run.
OC. Xavier is earning an economic profit and should expect to break even in the long run after the entry of new firms.
Xavier is incurring losses and should shut down in the long run.
O E. Xavier is earning an economic profit and should continue to produce to earn these profits in the long run.

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