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…