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:

Keynesian View

An economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.

Supply-Side View

An economic perspective emphasizing the importance of increasing production and supply as a key to economic growth, price stability, and employment.

Balanced Budget

A budget where revenues equal expenditures, resulting in no deficit or surplus.

New Classical View

An economic theory that emphasizes the importance of supply-side factors, rational expectations, and market-clearing prices.