The Cakery Bakery Sells 200 Muffins at a Price of $2

question 147

Multiple Choice

The Cakery Bakery sells 200 muffins at a price of $2 per muffin. Its explicit costs for producing 200 muffins are $350. The Cakery Bakeryʹs economic profits are

• A) $35.
• B) $50.
• C) $400.
• D) indeterminate from this information.

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Definitions:

Discount Rates

Interest rates used to determine the present value of future cash flows, important in finance for valuation and risk assessment purposes.

Cost Of Capital

The earnings rate a business must achieve on its investments to keep its market value stable and entice capital.

Debt And Equity

The two primary ways a company finances its operations, through borrowing money (debt) and selling shares (equity).

Use Of Funds

The detailed explanation of how a business or individual plans to allocate capital or revenue toward specific expenditures.