Refer to Scenario 9.10 below to answer the question(s) that follow. SCENARIO 9.10: Investors put up $1,040,000 to construct a building and purchase all equipment for a new cafe. The investors expect to earn a minimum return of 10 percent on their investment. The cafe 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 $2,000 in other fixed costs. Variable costs include $2,000 in weekly wages, and $600 per week in materials, electricity, etc. The cafe charges $6 on average per meal.Refer to Scenario 9.10. In the long run, the cafe will want to
A. operate and expand.
B. shut down but not go out of business.
C. go out of business.
D. operate but not expand.
Answer: C
You might also like to view...
Corporate profits are taxed twice.
Answer the following statement true (T) or false (F)
The law of diminishing marginal utility implies it is possible that the marginal utility of my tenth pistachio nut is less than the marginal utility of my third pistachio nut, other things constant
a. True b. False
Suppose that 1000 identical sellers each set their profit-maximizing output level at 18 units when price equals $10 . Then what is market quantity supplied at a price of $10
a. 100. b. 1,000. c. 10,000. d. 18,000.
Supply and demand both tend to be more elastic in the long run and more inelastic in the short run
a. True b. False Indicate whether the statement is true or false