Refer to Scenario 9.2 below to answer the question(s) that follow. SCENARIO 9.2: Tom borrowed $40,000 from his parents to open a donut stand. He agrees to pay his parents a 5% yearly return on the money they lent him. His other yearly fixed costs equal $10,000. His variable costs equal $25,000. He sold 40,000 dozen donuts during the year at a price of $2.00 per dozen.Refer to Scenario 9.2. Tom's profit is
A. $0.
B. $26,000.
C. $30,000.
D. $43,000.
Answer: D
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One goal a firm tries to achieve when it advertises a product is to
A) make the demand curve for the product more elastic. B) make the demand curve for the product unitary elastic. C) make the demand curve for the product more inelastic. D) shift the demand curve for the product to the left.
As prices rise, people will buy fewer goods and services because:
a. the interest rate has declined. b. aggregate demand has increased. c. the purchasing power of the fixed quantity of money has declined. d. the income of households has increased.
In the long run, increases in output per person arise primarily from:
A. increases in female labor force participation. B. increases in average labor productivity. C. an increasing proportion of the population retiring D. increases in male labor force participation.
Recall the Application about food and drink pricing during "happy hour" at bars and restaurants to answer the following question(s).Recall the Application. In a market subject to monopolistic competition, a restaurant's rational response to more elastic demand is to increase its price.
Answer the following statement true (T) or false (F)