Homer earns $10,000 per year. Each year he spends $5,000 and saves $5,000. He pays a 5 percent sales tax on all of his spending. Assuming the sales tax is the only tax he pays, his average tax rate out of his income is
A. 3.5 percent.
B. 2.5 percent.
C. 0 percent.
D. 5.0 percent.
Answer: B
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Any current outlay that is expected to yield a flow of benefits beyond one year in the future is:
a. a capital gain b. a wealth maximizing factor c. a capital expenditure d. a cost of capital e. a dividend reinvestment
Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out business. Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in lost production. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $120 per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cash management service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reduction in cash holdings will be invested in government bonds earning 7 percent, then how much money should Jan's hold?
A. $4,000 B. $10,000 C. $6,000 D. $8,000
If a firm wants to engage in price discrimination, it must have some market power.
Answer the following statement true (T) or false (F)
If a vineyard wants to raise funds to purchase a new bottling machine, it does so in the
A) factor market. B) output market. C) product market. D) alcoholic beverages market.