easy and hard econ

In the Keynesian Model, equilibrium occurs when expenditures are equal to output. If total output is greater than planned aggregate expenditures, then the tendency is for the economy to: A) expand. B) contract. C) create a new equilibrium at a higher level. D) rapidly expand. == Consider the following financial information for Cabrillo & Third Diversified: Annual Sales of $250,000 Opportunity cost of capital of $25,000 Fixed costs (excluding depreciation) of $70,000 Variable costs at 35% of sales Value of owner’s financial advice estimated at $15,000 Depreciation of $35,000 Corporate tax rate of 40% Based on this information, Cabrillo and Third Diversified: A) is earning the normal rate of return. B) has positive economic profits. C) is not earning the normal rate of return. D) has negative accounting profits.

A, for 2nd question, I don’t know what to use for capital cost… Since earnings after tax is 69500, I will pick B.


whoops, i agree with the first part Q to be B instead… i misread the question YET AGAIN…