The Following Data Are Available for the South Division of Redride

question 69

Multiple Choice

The following data are available for the South Division of Redride Products, Inc. and the single product it makes:
-If South wants a residual income of $50,000 and the minimum required rate of return is 10%,the annual turnover will have to be:

• A)0.32
• B)0.80
• C)1.25
• D)1.50

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Definitions:

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, measured in terms of opportunity costs.

Long Run

A period in economics where all factors of production and costs are variable, allowing full adjustment to changes.

Demand Curve

A diagram that illustrates the connection between a product's price and the amount of the product that buyers are prepared and capable of buying at different price levels.

Economic Profit

The difference between the total revenue earned by a business and the total costs (both explicit and implicit) of all resources used.