The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's total revenues exceed its total costs, including a normal profit, by:
A. $150,000.
B. $94,000.
C. $80,000.
D. $230,000.
Answer: B
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If the government allows business firms an investment credit to lower taxes, then
A) the user cost of capital declines and V* increases. B) the user cost of capital declines and V* decreases. C) the user cost of capital increases and V* decreases. D) the user cost of capital increases and V* increases.
Dante has two possible routes to travel on a business trip. One is more direct but more exhausting, taking one day but with a probability of business success of 1/4. The second takes three days, but has a probability of success of 2/3
If the value of Dante's time is $1000/day, the value of the business success is $12,000, and Dante is risk neutral, A) it doesn't matter which path he takes, because he doesn't consider risk. B) he should take the 1-day trip, because he doesn't consider risk. C) he should take the 1-day trip, because $11,000 is greater than $9,000. D) he should take the 3-day trip, because it will increase his expected net revenue by $3,000. E) he should take the 3-day trip, because it will increase his expected net revenue by $5,000.
Which of the following bank assets declined in value in the mid-2000s?
A) subprime loans B) mortgage-backed securities C) collateralized debt obligations D) nontraditional loans E) all of the above
The average variable cost curve slopes upward with a higher rate of output in the short run because of
A. Implicit but not explicit costs. B. The shape of the average fixed cost curve. C. The effect of diminishing returns. D. Diseconomies of scale.