Farmer Jean sells corn in a perfectly competitive market. The market price for a bushel of corn is $6. Jean has six hundred bushels of corn to sell. If her total variable cost is $3,300 and her total fixed cost is $300, then: a. Jean should raise her price. b. Jean is earning a positive economic profit. c. Jean is minimizing her losses. d. Jean is earning a normal profit.

The correct answer is:

a. Jean should raise her price (b)

Explanation:

We have to choose an option that is correct, and in order to do so, we will first analyse the total amounts involved in Jeans cost price and selling price respectively.

Cost price = total variable cost + total fixed cost

= 3,300 + 300 = $3,600

Selling price;

price per bushel = $6

Number of bushels = 600

Therefore, total selling price = 6 × 600 = $3,600

From the analysis above you will discover that the cost price and the selling price is the same, and the purpose of going into business is to make profit, in keeping with this, the best option is option "a" ; Jean should raise her price.

The other options are wrong because, Jean is not earning positive economic profit (b), she is not making profit at all,

Jean is not making a loss, so option (c), is wrong.

Jean is not making profit, so option (d) is also wrong

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