The Following Figure Shows the Cost and Revenue Structures of a Firm

question 120

Multiple Choice

The following figure shows the cost and revenue structures of a firm. MC represents the marginal cost curve, AC represents the average cost curve, AR represents the average revenue curve, and MR represents the marginal revenue curve. P* is the equilibrium price and Q* is the equilibrium output.Figure 9.5

-Suppose Mark invests a sum of $100,000 in a new venture. To fund his investment, Mark withdraws $50,000 from a savings account paying 10% per year and uses the proceeds from a bond that has just matured worth $50,000. If he had reinvested the proceeds from the bond, he could have earned interest at the rate of 5%. Calculate the opportunity cost of capital for Mark in a particular year.

• A)$5,000
• B)$7,500
• C)$10,000
• D)$12,500
• E)$100,000

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Definitions:

Demand Curve

A graph representing the relationship between the quantity of a good that consumers are willing and able to purchase and its price.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that suppliers are willing to produce and sell.

Nike

A global corporation specializing in the design, development, and worldwide marketing of footwear, apparel, equipment, and accessory products.

Adidas

A global sports footwear and apparel manufacturer known for its innovation and association with athletics and leisure wear.