Use the information below to answer the following questions.

Fact 11.4.1

Franklin is a fiddlehead farmer. He sold 10 bags of fiddleheads last month, with total fixed cost of $100 and total variable cost of $50.

Refer to Fact 11.4.1. Suppose the price of fiddleheads is expected to stay at $10 per bag for the foreseeable future, and Franklin's production and cost figures are expected to stay the same. His total fixed cost consists entirely of rent on land, and his five-year lease on the land runs out at the end of the month. Should Franklin renew the lease?

Question

Use the information below to answer the following questions. 
 
 Fact 11.4.1 
 
 Franklin is a fiddlehead farmer. He sold 10 bags of fiddleheads last month, with total fixed cost of $100 and total variable cost of $50.

Refer to Fact 11.4.1. Suppose the price of fiddleheads is expected to stay at $10 per bag for the foreseeable future, and Franklin's production and cost figures are expected to stay the same. His total fixed cost consists entirely of rent on land, and his five-year lease on the land runs out at the end of the month. Should Franklin renew the lease?

Answer

No, because total revenue must cover all costs for factors of production to remain in fiddlehead farming in the long run.

Answer

Yes, because total revenue will still cover total fixed cost.

Answer

Yes, because total revenue will still cover total variable cost and a portion of total fixed cost.

Answer

Insufficient information to answer.

Answer

No, because in the long run, zero economic profit is a signal to move factors of production out of fiddlehead farming.

Crowdly

Use the information below to answer the following questions. Fact 11.4.1 ...

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