Question 1
You borrow $20,000 at an interest rate of 6% to open Candy Dan's, a gourmet sweet shop. If the return on your investment is ________, then you will earn an economic loss.
◦ less than 6%
◦ exactly 6%
◦ greater than 6%
◦ It is indeterminate from the given information.
Question 2
A manufacturing company designs and produces an incredibly efficient solar heating system for large buildings and earns very large profits on it. Which of the following is
true?
◦ The profits this firm earns are a return for an innovation.
◦ The profits this firm earns aren't deserved, as the firm did not take any risks.
◦ This firm must not be in a competitive market if it was able to earn a profit.
◦ both The profits this firm earns are a return for an innovation and This firm must not be in a competitive market if it was able to earn a profit