8. The working capital of a small home-based business is $200,000. The revenues generated account
to $600,000, and the profits incurred are $300,000. What would be the company's working capital
A. 3, that is, $600,000/$200,000
B. $300,000, that is, $600,000 - $300,000
C. 2, that is, $600,000/$300,000
D. $100,000, that is, $300,000 - $200,000
26. A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets
a dividend of $2000 annually. In this case, the market capitalization is _____.
A. 30,000 shares, that is, 30 million shares/$100
B. $200,000, that is, $2000 × $100
C. $3 billion, that is, 30 million shares × $100
D. 20:1, that is, $2000/$100
51. Samantha is a recent fashion graduate. She started her own apparel store with an investment of
$300,000. In the first year she made a profit of $60,000. If she had taken up a job as a fashion editor
for a magazine, she would have earned $50,000 as salary per year. Also, she could have invested her
capital, $300,000, in treasury bonds and earned an interest of $12,000. Thus, the amount $62,000
($50,000 + $12,000) would be Samantha's _____.
A. social cost
B. break-even price
C. reservation price
D. opportunity cost
52. Andrew invested $200,000 in the shares of a company. At the end of a year, he had earned $7,000 as
dividends on his shares along with a $1,000 appreciation in the overall value of his shares. However,
if Andrew had invested the same amount on an asset, like gold, the appreciation in its value would
have earned him $10,000 at the end of the year. In this scenario, which of the following is Andrew's
. When a firm manufactures 2,000-3,000 units of a product, it incurs an average cost of $10 per unit.
When it manufactures 3,000-4,000 units of the same product, the average cost per unit reduces to $7.
However, manufacturing beyond 4,000 units will raise the average cost per unit to $9. Which of the
following is the firm's minimum efficient scale?
A. 2,000-3,000 units
B. 3,000-4,000 units
C. Below 2,000 units
D. Above 4,000 units
When a firm operates at an output level of 9,000 units, the per-unit cost is $5. When the production
is between 10,000-12,000 units, the per-unit cost is $4. At a production level of 13,000 units, the
production cost is again $5 per unit. At 14,000 units and above, the production cost increases further.
At what output level does the firm experience economies of scale?
A. 9,000 units
B. 11,000 units
C. 13,000 units
D. 15,000 units
Red Empire Inc., a large multinational company owned by two partners, is active in the petroleum,
capital market, chemicals, steel, beverages, hospitality, airlines, education, automobiles, and consumer
electronics industries. The company has multiple brands and a large product portfolio under its
banner. Which of the following terms would best describe this company?
A. A flagship brand
B. A single-business firm
C. A dominant-business firm
D. A conglomerate