Andre Runs a Company That Yields a Profit of $40,000

question 13

Multiple Choice

Andre runs a company that yields a profit of $40,000 per year,and this profit stream is expected to continue indefinitely.If the interest rate equals 8 percent,he will be willing to sell the company at a price of _____

• A)$40,000.
• B)$60,000.
• C)$100,000.
• D)$250,000.
• E)$500,000.

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Definitions:

Output Tax

A tax levied on the quantity of production or output generated by a company, as opposed to income or profit.

Perfectly Elastic

An economic term describing a situation where the quantity demanded or supplied changes infinitely in response to any change in price.

Increasing-Cost Industry

Industry whose long-run supply curve is upward sloping.

Output Tax

A tax levied on the production or output of goods and services, often implemented to regulate or diminish the production of certain products.