swer all questions: Question 1(5 points): Select the best correct answer I. Vari
ID: 1165081 • Letter: S
Question
swer all questions: Question 1(5 points): Select the best correct answer I. Variable costs for a product per year are 40% of the annual revenue. The fixed costs for this product are S180,000 per year. If the annual revenue for this product is $300,000, then the annual profit/loss is A. Zero B. $120,000 (profit) C. $20,000 (profit) D. $20,000 (loss) 2. In economics, equity capital is: A. The capital owned by individuals who have invesicd their money in a business project or venture in the hope of receiving a profit B. The capital owned by individuals who have invested their property in a business project or venture in the hope of receiving a profit C. A and B above D. None of the above 3. The demand-price relationship for producing an electrical switch is: D-400 4p The total annual cost (CT) for this product is: CT-2D+240, where D is the demand per year. The demand that can maximize the revenue is A. 196 units/year B. 200 units/year C. 177 units/year D. 124 units/year 4. The total revenues for a product always increase wh en A. The demand for the product increases B. The total cost of the product decreases C. A and B above D. None of the above For a nominal interest rate of 12% rate per compounding period is: 5. compounded every four months, the actual interest A:4% B. 3% C. 12.551% D. 12.486%Explanation / Answer
1) Annual Revenue = 300000
Variable Cost = (40 * 300000)*100 = 120000
Fixed Cost = 180000
Annual Profit = Annual revenue - Fixed cost - variable cost
Annual Profit = 300000 - 180000 - 120000 = 0.
A. Zero.
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2) Equity Capital is the money invested in a business which is not repaid back to the investor in the ordinary course of business.
A. The capital owned by the individuals who have invested their money in a business project or venture in the hope of redceiving a profit.
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3) D = 400 - 4P
P = 100 - 0.25D
Total revenue = PD = 100D - 0.25D2
Marginal Revenue = d(TR) / dD = 100 - 0.5D
C = 2D + 240
Marginal Cost = dC / dD = 2
At equilibrium,
Marginal Revenue = Marginal Cost
100 - 0.5D = 2
D = 196 --------------Revenue maximising demand.
A. 196 units per year
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4) Total Revenue is the revenue earned by selling a product at a given price. Total Revenue depends on price and quantity demanded. A change in any one of the two determinants may alter total revenue.
A. The demand for the product increases.
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5) Actual Interest = Nominal interest / Number of times interest is compounded within a year
Actual Interest = 12 % / 3 = 4%.
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