Table 53 -Refer to Table 5

question 105

Multiple Choice

Table 5.3
$$\begin{array} { | l | c | } \hline{ \begin{array} { c } \text { The Waco Kid's } \\\text { Cowboy Hats }\end{array} } & \begin{array} { c } \text { Marginal Cost } \\\text { (dollars) }\end{array} \\\hline \text { 1st hat } & 24 \\\hline \text { 2nd hat } & 30 \\\hline \text { 3rd hat } & 38 \\\hline \text { 4th hat } & 46 \\\hline\end{array}$$
-Refer to Table 5.3.The table above lists the marginal cost of cowboy hats by The Waco Kid,a firm that specialises in producing fancy dress costumes.If the market price of The Waco Kid's cowboy hats is $40,__________.

• A) The Waco Kid will produce four hats
• B) producer surplus from the first hat is $40
• C) producer surplus will equal $28
• D) there will be a surplus; as a result, the price will fall to $24

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Definitions:

Trading On The Equity

The practice of borrowing funds at a lower rate of interest to invest in assets that yield a higher rate of return, utilizing the leverage to increase equity returns.

Profitability

Profitability measures the degree to which a business or activity yields profit or financial gain.

Liquidity Ratios

Financial metrics used to determine an entity's ability to pay off its short-term debts obligations.

Profitability Ratios

Financial metrics used to assess a business's ability to generate earnings relative to its revenue, assets, equity, or other financial metrics.