Refer to Scenario 9.3 below to answer the question(s) that follow. SCENARIO 9.3: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal. Refer to Scenario 9.3. Total revenue per week is
A. $3,000.
B. $4,000.
C. $4,500.
D. $8,100.
Answer: C
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What will be an ideal response?
Comment on the following statement: "Capital investment decisions always involve risk."
What will be an ideal response?
A monopolistically competitive firm
a. charges a price that is equal to marginal cost. b. experiences a zero profit in the long run. c. produces at the efficient scale in the long run. d. All of the above are correct.
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