You use $45,000 of your own money to start an espresso stand. During the first year you earn a 10% return on that investment. If the current interest rate is 8%, you earn an economic profit of
A. -$900.
B. $100.
C. $500.
D. $900.
Answer: D
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Which of the following describes the substitution effect of a price change?
A) The change in quantity demanded of a good that results from the change in the price of a substitute for the good. B) The change in demand that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power. C) The change in quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant. D) The change in quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power.
If the government could raise taxes on one good, which product should the government increase tax rates in order to raise tax revenue?
a. Cigarettes b. Alcohol c. Sodas d. None of the above
Which of the following is characteristic of a perfectly competitive market? a. There is free entry into and exit from the market
b. Individual firms can exert a perceptible influence on the market price. c. Firms in the market produce a differentiated product. d. All of the above are true.
If one is on the contract curve
A. further beneficial trades can occur. B. no further voluntary trade will occur. C. the indifference curves of both consumers are crossing. D. the allocation is not Pareto optimal.