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. The bakery is making ________ economic profits per week.
A. break-even
B. zero
C. positive
D. negative
Answer: C
You might also like to view...
According to the short-run Phillips curve, the cost of reducing unemployment is an increase in the rate of inflation.
Answer the following statement true (T) or false (F)
Which of the following explains why fluctuations in real GDP have become less volatile in the United States since 1950?
A) Services have become a smaller fraction of GDP since the 1950s. B) Unemployment insurance and other government transfer programs are more prevalent since the 1950s. C) The government has become more reluctant to intervene when real GDP declines and unemployment rises since the 1950s. D) both B and C
Within a game theory model, if a change in decision-making raises corporation A's profits by $50 and lowers corporation B's profits by $40, the game is a
A) negative-sum game. B) zero-sum game. C) positive-sum game. D) cooperative game.
When PAE decreases then the economy will move towards:
A. lower levels of equilibrium GDP. B. higher levels of equilibrium GDP. C. constant levels of GDP. D. higher levels of equilibrium aggregate expenditure.