Refer to Scenario 9

question 194

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. The economic profit is

• A) -$3,600.
• B) -$1,200.
• C) $0.
• D) $5,400.

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Definitions:

Carleton University

A public research university in Ottawa, Ontario, Canada, known for its strong programs in journalism, public affairs, and international affairs.

Midterm

An examination administered in the middle of an academic term or period of instruction to assess student learning to that point.

Psychology

The scientific study of the mind and behavior, encompassing various aspects of the conscious and unconscious experience.

Misinformation Effect

A phenomenon where a person's recall of episodic memories becomes less accurate because of post-event misinformation.