Refer to Scenario 9

question 202

Multiple Choice

Refer to Scenario 9.10 below to answer the question(s) that follow.
SCENARIO 9.10: Investors put up $1,040,000 to construct a building and purchase all equipment for a new cafe. The investors expect to earn a minimum return of 10 percent on their investment. The cafe is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly) . Included in the fixed costs is the 10% return to the investors and $2,000 in other fixed costs. Variable costs include $2,000 in weekly wages, and $600 per week in materials, electricity, etc. The cafe charges $6 on average per meal.
-Refer to Scenario 9.10. Weekly total revenue is

• A) $1,600.
• B) $2,000.
• C) $3,600.
• D) $5,400.

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Definitions:

Revenue Maximization

A goal of businesses to achieve the highest possible sales revenue from their activities.

Tickets

Documents or electronic vouchers that grant the holder permission to enter an event, travel on public transport, or access a service.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price, defined as the percentage change in quantity demanded divided by the percentage change in price.

Linear

In mathematics, linear refers to a relationship or function that can be graphically represented as a straight line, indicating a constant rate of change.