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 restaurant's weekly economic profit is
A. zero.
B. positive.
C. negative.
D. break-even.
Answer: C
You might also like to view...
Initially, the economy is at point B on Figure 10-2 above. According to the Solow growth model, a dramatic decrease in the rate of saving after complete adjustment shifts the economy from ________
A) B to H, increasing output per capita B) B to C, increasing output and capital per capita C) B to D, decreasing the output and capital per capita in the long run D) B to E, decreasing output per capita but holding per capita capital constant
The above figure shows the cost curves for a typical firm in a market and three possible market supply curves. If there are 100 identical firms, the market supply curve is best represented by
A) curve A. B) curve B. C) curve C. D) either curve A or B, but definitely not C.