How much is this firm's output?

Several national fast-food chains offer "kids' meals" with free giveaway toys, something many independent, local establishments cannot afford to do. The national chains are

A) engaging in predatory pricing. B) selling meals below cost. C) distributing toys below cost. D) engaging in anti-competitive behavior because the independents cannot afford to give away toys. E) almost certainly doing none of the above.

Billy is considering the purchase of a rental house. The house costs $240,000 and it will generate annual revenues of $15,000 and annual expenses of $3,000. Nevertheless, Billy will need to borrow $240,000 at an interest rate of 7% per year in case he decides to make this investment. Should Billy purchase this house?

A) No, he will lose money. B) Yes, his profits will be zero. C) No, his profits will be positive but close to zero. D) Yes, he will profit from this investment.