Refer to Scenario 9.8 below to answer the question(s) that follow. SCENARIO 9.8: Investors put up $1,040,000 to construct a building and purchase all equipment for a new gourmet cupcake bakery. The investors expect to earn a minimum return of 10 per cent on their investment. The bakery is open 52 weeks per year and sells 900 cupcakes 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 bakery charges $8 on average per cupcake.Refer to Scenario 9.8. If the bakery were to shut down, losses per week would be
A. $2,000.
B. $3,600.
C. $4,000.
D. $7,200.
Answer: C
Economics
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Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the market price of cowboy hats is $35, The Waco Kid will produce
A) 1 hat. B) 2 hats. C) 3 hats. D) 4 hats.
Economics
Which of the following can lead to market failure?
a. externalities and market power b. externalities but not market power c. market power but not externalities d. neither externalities nor market power
Economics