Refer to Scenario 9.5 below to answer the question(s) that follow. SCENARIO 9.5: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 percent on their investment. The restaurant 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 $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $3 on average per meal. Refer to Scenario 9.5. The weekly economic profit is
A. $1,000.
B. $0.
C. -$900.
D. -$3,600.
Answer: C
You might also like to view...
Consumer surplus is accurately measured along (uncompensated) demand curves when tastes are quasilinear.
Answer the following statement true (T) or false (F)
The Fed's countercyclical policy tools to eliminate a recession include lowering:
a. the required reserve ratio, cutting the discount rate, and selling government bonds on the open market. b. the required reserve ratio, raising the discount rate, and selling government bonds on the open market. c. the required reserve ratio, raising the discount rate, and buying government bonds on the open market. d. the discount rate, cutting the discount rate, and raising the margin requirement. e. the reserve requirement, lowering the discount rate, and buying government bonds on the open market.
Nominal GDP is not used to determine recessions because inflation can disguise the occurrence of recessions.
Answer the following statement true (T) or false (F)
Scarcity exists because economies cannot produce enough to meet the perceived desires of all individuals.
Answer the following statement true (T) or false (F)