Refer to Scenario 9.8 below to answer the question(s) that follow. SCENARIO 9.8: Investors put up $1,040,000 to construct a building and purchase all equipment for a new gourmet cupcake bakery. The investors expect to earn a minimum return of 10 per cent on their investment. The bakery is open 52 weeks per year and sells 900 cupcakes 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 $2,000 in other fixed costs. Variable costs include $2,000 in weekly wages, and $600 per week in materials, electricity, etc. The bakery charges $8 on average per cupcake.Refer to Scenario 9.8. Economic profit per week is
A. -$400.
B. $0.
C. $600.
D. $900.
Answer: C
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Income inequality in the United States has increased in part due to technological change. How does technological change contribute to income inequality?
A) It reduces the cost of producing goods and therefore lowers the value of labor services. B) It is responsible for a majority of new products on the market, and these products are only affordable to higher-income households. C) It allows manufacturers to produce products with less labor, and this reduction in the demand for labor lowers wages at all skill levels. D) It has created many higher-income jobs for skilled and trained workers, leaving the income of less-skilled workers relatively unchanged by comparison.
A firm wishes to shut down an office and fire 100 employees. The company will save $3000 per month per employee. It is estimated that each employee contributes $4,100 to the company. The firm rents office space for this group of employees at $1500 . What should the company do?
a. Fire the employees and save $1500 on rent b. Not fire the employees keeping them generates a profit of $1100 per employee c. Not fire the employees since keeping them generates a profit of $1085 per employee d. None of the above
The two basic types of government regulation are
A) regulation of natural monopolies and regulation of cartels. B) economic regulation and industry regulation. C) social regulation and labor law. D) social regulation and economic regulation.
The largest component of GDP is:
a. personal consumption expenditures. b. government spending. c. durable goods. d. net exports. e. gross private domestic investment.