Questien LS neintsik Select the best correct nswer. t. Variable costs for this p
ID: 1165616 • Letter: Q
Question
Questien LS neintsik Select the best correct nswer. t. Variable costs for this product $180,000 $300,000, then the annual profitioss is for " produet per year are 40% ofthe annual tevem. The nsedeom " are s' so,000 per year. If armsal revenue tur this produit's A. Zero B. $120,000 (profit C. $20,000 (profito D. $20,000 (loss) 2. In economics, equity capital is: capital owned by individuals who have invested their money in a business project or venture in the hope of receiving a profit The capital owned by individuals who have invested their property in a business projeet or venture in the hope of receiving a profit C. A and B above D. None of the above 3- The demand-price relationship for producing an electrical switch is. D-400-4p. The total annual cost (Cr) for this product is: Cy-2D+ 240, where D is the demand per year. The demand that can maximize the revenue is: A. 196 units/year B. 200 units/year C. 177 units/year D. 124 units/year 4. The total revenues for a product always increase when: A. The demand for the product increases B. The total cost of the product decreases C. A and B above D. None of the above 5 For a nominal interest rate of12% compounded every four months, the actual interest rate per compounding period is: A. 496 B. 3% C. 12.551% D. 12.486% .12Explanation / Answer
1. (a) Zero
Variabe cost = 40% of annual revenue
= 40 / 100 x 300,000
= $1,20,000
Fixed cost = $1,80,000
Total cost = Variable cost + Fixed cost = $1,20,000 + $1,80,000 = $300,000
Annual Profit/loss = Total revenue - Total cost
= $300,000 - $300,000
= 0 (Zero)
Thus, answer (A)
2. (d) None of the above.
Equity capital is Money contributed to the businesses in return for part ownership of the business. It is not the money or property invested by an indivdual into a business project or venture in hope to earn profit.
3. Option (A) 196 units/year
Since we have to find demand that would maximize the revenue:
Let's stat with option (b) i.e., 200 units per year.
Substituing value of D = 200, into D = 400 - 4P, we get P = $50.
Finding out total cost in the same way, substitue D = 200 in C = 2D + 240, we get, C = 640
Revenue = (Quantity (Demand) x Price) - Cost
= (200 x 50) - 640
= $9,360
Similarly solving for other three options, we get,
When D = 196, Revenue = $9,364
When D = 177, Revuenue = $9,274
When D = 124, Revenue = $8,068
Since, revenue is maximum when D = 196 units/year, option (A) is the answer.
4. (a) the demand for the product increases.
Since Total revenue = Price x quantity, if the quantity demanded is increasing the TR will increase.
Total Revenue is the amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the top line or gross income figure from which costs are subtracted to determine net income.