Mary Magnolia in Problem 4 Has Variable Costs Equal to

question 14

Multiple Choice

Mary Magnolia in Problem 4 has variable costs equal to , where y is the number of bouquets she sells per month and where F is the number of square feet of space in her shop. If Mary has signed a lease for a shop with 1,000 square feet, if she is not able to get out of the lease or to expand her store in the short run, and if the price of a bouquet is $3 per unit, how many bouquets per month should she sell in the short run?

• A) 1,500
• B) 500
• C) 2,250
• D) 1,000
• E) 1,650

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Definitions:

APT Model

Arbitrage Pricing Theory Model, an alternative to the Capital Asset Pricing Model (CAPM), asserts that the expected return of a financial asset can be modeled as a linear function of various macro-economic factors or theoretical market indexes.

Security Returns

The gains or losses from investing in a security, usually expressed as a percentage of the initial investment.

Arbitrage Opportunities

Situations where a financial instrument, or a combination of financial instruments, can be bought and sold simultaneously in different markets to profit from price discrepancies.