You Borrow $10,000 at an Interest Rate of 5% to Open

question 176

Multiple Choice

You borrow $10,000 at an interest rate of 5% to open Movies Galore, a DVD rental store. You will earn an economic loss if

• A) the return on your investment is less than 5%.
• B) the return on your investment is exactly 5%.
• C) the return on your investment is greater than 5%.
• D) indeterminate from given information.

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Definitions:

Industry Entry

The process of a new competitor or company beginning operations in a specific market or industry.

MR

Marginal Revenue, the additional income that is gained from selling one more unit of a product or service.

Profit-Maximizing

A strategy or approach aimed at achieving the highest possible profit from business operations.

Positive Profits

A financial gain that occurs when the revenues generated from business activities exceed the costs and expenses involved in operating the business.