Suppose the Development Department of a Firm Charges 10% of Its

question 63

Multiple Choice

Suppose the development department of a firm charges 10% of its total monthly costs to the promotional department, and the promotional department charges 5% of its total monthly costs to the development department. The direct costs of the development department are $25,400, and the direct costs of the promotional department are $9,400. The solution to the matrix equation or the column matrix gives the total costs for each department. Note that this equation can be written in the form or , which is the form for an open economy. Find the total costs for each department in this (micro) economy. ​

• A) development = 27,000, promotional = 11,000
• B) development = 27,000, promotional = 12,000
• C) development = 26,000, promotional = 12,000
• D) development = 38,000, promotional = 12,000
• E) development = 26,000, promotional = 11,000

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Definitions:

Financial Capital

Refers to the funds provided by lenders (and investors) to businesses to purchase real capital.

Machinery

Equipment and devices that perform specific tasks in industries, contributing to production processes.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the financial gain in conducting business activities.

Rate of Return

The increase or decrease in the value of an investment over a set time frame, shown as a percent of the investment's original price.