Mary Magnolia Has Variable Costs Equal to Y²/F, Where Y

question 9

Multiple Choice

Mary Magnolia has variable costs equal to y²/F, 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 1,400 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)1,400
• B)3,150
• C)700
• D)2,100
• E)2,310

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Definitions:

Initial Margin

The minimum amount of funds required to be deposited in a margin account before trading on leverage to ensure that the account can cover potential losses.

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account to cover potential losses.

T-bill Rate

The yield or interest rate on Treasury bills, which are short-term debt securities issued by the U.S. government.

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial asset at a predetermined price at a specified time in the future.