Scenario 9.2
Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments.
-If the market price of oats is $2.5 per bushel and a farmer decides to sell at $2.8 per bushel, he is likely to sell:

Question

Quizplus · Accepted Answer

The firm has an economic profit of $15 million ($350 million revenue - $320 million costs - $10 million opportunity cost of capital). The farmer's decision to sell at a higher price than the market price suggests that he may not find buyers, leading to selling nothing.

Scenario 9.2 Consider a Publicly Held Firm (One Whose Stock Shares Are