Refer to the Accompanying Graph to Answer the Following Questions

question 102

Multiple Choice

Refer to the accompanying graph to answer the following questions.

-Is this firm earning positive,negative,or zero economic profits?

• A) We cannot determine the firm's level of profit because we do not know about its revenues.
• B) It is earning positive economic profit.
• C) Because this is the short run,all firms earn positive economic profit.
• D) It is earning zero economic profit.
• E) It is earning negative economic profit.

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Definitions:

Total Return

The overall financial gain or loss on an investment, including both capital appreciation/depreciation and dividends or interest over a given period.

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its stock price.

Capital Gains Yield

The price appreciation component of the total return on an investment, calculated as the change in the price of the investment over a period of time.

Required Rate

A rephrased definition for the Required Rate of Return; it is the least annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.