The Table Shows the Projected Rate of Return and Number

question 101

Multiple Choice

The table shows the projected rate of return and number of investment projects that might be undertaken by a small firm. Each project requires an investment of $1,000. If the interest rate decreases from 25 percent to 20 percent, the quantity of loanable funds demanded by this firm

• A)increases by $1,000.
• B)increases by $3,000.
• C)decreases by $3,000.
• D)decreases by $4,000.

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Definitions:

Making a Profit

The financial gain obtained when the revenue generated from a business activity exceeds the expenses, taxes, and costs associated with maintaining the operation.

Breaking Even

The point at which total costs and total revenue are equal, meaning no net loss or gain has been made.

Taking a Loss

A situation where a business or individual sells an asset for less than its purchase price, resulting in a financial deficit.

Marginal Revenue

The additional income received from selling one more unit of a good or service; it is a critical factor in decision-making for firms in competitive markets.