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. Economic profit per week is
A. ?$400.
B. $0.
C. $600.
D. $900.
Answer: D
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Suppose the yield on government bonds rises. This should cause __________ in the discount factor in the stock price valuation formula and __________ in stock prices
A) a fall; a rise B) a rise; a fall C) a fall; a fall D) no change; no change
The existence of a monopoly:
A. creates market inefficiencies. B. causes consumers to get less at a higher price. C. causes a reduction in total surplus. D. All of these statements are true.
The Federal Reserve decides to lower the discount rate. The resulting economic change will be represented by a(n): a. upward movement along the short-run Phillips curve. b. downward movement along the short-run Phillips curve. c. rightward shift of the short-run Phillips curve
d. leftward shift of the short-run Phillips curve.
Labor productivity will decrease if a firm
A. boosts employee morale. B. holds excess labor. C. pays efficiency wages. D. improves employee benefits.