Jeff Has Recently Started Buying and Selling Commemorative Mugs

question 3

Multiple Choice

Jeff has recently started buying and selling commemorative mugs. He buys them for £4 per mug and sells them for £7 each. Since he started trading, he has bought 2,000 and sold 1,800 mugs, all for cash. Which of the following statements is true for the period since trading started?

• A) The business has made a profit of £6,000 and has increased its bank balance by £14,000.
• B) The business has made a profit of £6,000 and has increased its bank balance by £4,600.
• C) The business has made a profit of £5,400 and has increased its bank balance by £4,600.
• D) The business has made a profit of £5,400 and has increased its bank balance by £5,400.

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Definitions:

Maximum Profit Equilibrium

The point at which a firm achieves its highest level of profit given its production and cost constraints.

Price Labor

The cost associated with hiring workers or the wage that employers pay to their employees for their labor.

ATMs

Automated Teller Machines, devices that allow bank customers to perform financial transactions without the need for a branch representative.

Bank Tellers

Employees of a bank who deal directly with customers, handling transactions, cash checks, accept deposits, and provide account information.