(9N9.2) Would a lump-sum profits tax affect the profit-maximizing quantity of output? How about a proportional tax on profits? How about a tax assessed on each unit of output? How about a tax on labor input?

(9N9.2) Would a lump-sum profits tax affect the profit-maximizing quantity of output? How about a proportional tax on profits? How about a tax assessed on each unit of output? How about a tax on labor input?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 3E

See similar textbooks

Similar questions

Manuel lives in Dallas and operates a small company selling drones. On average, he receives $778,000 per year from selling drones. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $462,000. He also pays several utility companies, as well as his employees wages totaling $257,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $12,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the drone business, he can work as a blogger and earn a yearly salary of $50,000 with no additional monetary costs, and rent out his storefront at the $12,000 per year rate. There are no other costs faced by Manuel in running this drone company. Identify each of Manuel’s costs in the following table as either an implicit cost or an explicit cost of selling drones. Implicit Cost Explicit Cost The wholesale cost for the…
Bob lives in Miami and operates a small company selling bikes. On average, he receives $778,000 per year from selling bikes. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $462,000. He also pays several utility companies, as well as his employees wages totaling $257,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $12,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Bob does not operate the bike business, he can work as a blogger and earn a yearly salary of $50,000 with no additional monetary costs, and rent out his storefront at the $12,000 per year rate. There are no other costs faced by Bob in running this bike company. Accounting Profit Economic Profit
Q1. The Laundromat Corporation is considering opening another coin-operated laundry in a city. It has estimated that opening the laundry would involve an initial cost of $100,000 and would generate a net cash flow of $32,000 in each of the following five years, with no salvage value for the equipment and no recovery of operating expenses at the end of the five years. The corporation estimates that it would have to pay a rate of 12% on its bonds and that it would face a marginal income tax rate of 40%. The interest on government securities is 10%. During the current year, the corporation expects to pay a dividend of $20 on each share of its common stock, which sells for 10 times current earnings. Management and outside analysts expects the growth rate of earnings and dividends of the corporation to be 7% per year. The return on the average stock of all firms in the market is 14%, and the estimated beta coefficient () for the common stock of the corporation is 1.25. The corporation…
just answer the part e notice that you can do part e without the answer of abcd.
This question contains two parts and they are independent of each other. Part 1: During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expenses, raw materials, rent, and utilities. The firm’s owner has provided $750,000 of her own money instead of investing the money and earning a 10 percent annual rate of return. The accounting costs of the firm are $_______________ The opportunity cost is $_______________ Total economic costs are $_______________ Accounting profits are $_______________ Economic profits are $_______________ Part 2: Higher personal taxes in the U.S. will affect personal disposable income which in turn will affect the domestic demand for goods and services. Costs of production, however, continue declining resulting from outsourcing overseas. What do you expect the U.S. output and prices in the near future?…
Assume r = 0.1 is the present real interest rate and this rate is expected to prevail for the next 2 years. The monetary return (i.e. marginal revenue product) on machine A is expected to be R1 = $100,000 for year 1 and R2 = $50,000 for year 2. The present discounted value (PDV) of the net revenue flow from machine A to its owner is equal to ???
You have the opportunity to get a VEGGIE Café franchise (this specializes in BOCA veggie Burgers and other heart-healthy, non-GMO fast foods). You now manage three Big Bird Stick-e-Chicken shops for another owner, and feel you are ready to be your own boss. You estimate you can gross 70% of Stick-e-Chicken’s gross sales (which last year totaled $600,000). You will have to pay Veggie, Inc., an annual franchise fee of $1,500 plus another 4% of gross sales. You will have to pay two types of advertising expenses: local advertising (which will cost $6,000 a year) and your share of National advertising (which will be 2% of gross sales). A store location (formerly a Burger Hut) is available for only $6,000 a year plus a yearend rent bonus of 1% of estimated gross sales greater than $60,000. You will have to borrow money from a bank at 10% per annum (which will cost you $18,500 a year in interest). Your life savings of $50,000 will have to be invested in the business (thus you will…
You have the opportunity to get a VEGGIE Café franchise (this specializes in BOCA veggie Burgers and other heart-healthy, non-GMO fast foods). You now manage three Big Bird Stick-e-Chicken shops for another owner, and feel you are ready to be your own boss. You estimate you can gross 70% of Stick-e-Chicken’s gross sales (which last year totaled $600,000). You will have to pay Veggie, Inc., an annual franchise fee of $1,500 plus another 4% of gross sales. You will have to pay two types of advertising expenses: local advertising (which will cost $6,000 a year) and your share of National advertising (which will be 2% of gross sales). A store location (formerly a Burger Hut) is available for only $6,000 a year plus a yearend rent bonus of 1% of estimated gross sales greater than $60,000. You will have to borrow money from a bank at 10% per annum (which will cost you $18,500 a year in interest). Your life savings of $50,000 will have to be invested in the business (thus you will…
You have the opportunity to get a VEGGIE Café franchise (this specializes in BOCA veggie Burgers and other heart-healthy, non-GMO fast foods). You now manage three Big Bird Stick-e-Chicken shops for another owner, and feel you are ready to be your own boss. You estimate you can gross 70% of Stick-e-Chicken’s gross sales (which last year totaled $600,000). You will have to pay Veggie, Inc., an annual franchise fee of $1,500 plus another 4% of gross sales. You will have to pay two types of advertising expenses: local advertising (which will cost $6,000 a year) and your share of National advertising (which will be 2% of gross sales). A store location (formerly a Burger Hut) is available for only $6,000 a year plus a yearend rent bonus of 1% of estimated gross sales greater than $60,000. You will have to borrow money from a bank at 10% per annum (which will cost you $18,500 a year in interest). Your life savings of $50,000 will have to be invested in the business (thus you will…
A coal-fired power plant can produce electricity at a variable cost of 4 cents per kilowatt hour when running at its full capacity of 30 megawatts per hour, 16 cents per kilowatt hour when running at 20 megawatts per hour, and 24 cents per kilowatt hour when running at 10 megawatts per hour. A gas-fired power plant can produce electricity at a variable cost of 12 cents per kilowatt-hour at any capacity from 1 megawatt per hour to its full capacity of 5 megawatts per hour. The cost of constructing a coal-fired plant is $50 million, but it costs only $10 million to build a gas-fired plant. a. Consider a city that has a peak afternoon demand of 80 megawatts of electricity. If it wants all plants to operate at full capacity, what combination of coal-fired plants and gas-fired plants would minimize construction costs? b. How much will the city spend on building that combination of plants? c. What will the average cost per kilowatt-hour be if you average over all 80 megawatts that are…
The sole proprietor of the Alton Plumbing Supply Company receives all accounting profits earned by his firm and a $30,000 a year salary. He has a standing salary offer of $40,000 a year working for a large corporation. If he had invested his capital outside his company, he estimates that would have returned $15,000 this year. If accounting profits for the year were $65,000, economic profits were:
Charles lives in Houston and operates a small company selling drones. On average, he receives $849,000 per year from selling drones. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $390,000. He also pays several utility companies, as well as his employees wages totaling $359,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $72,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Charles does not operate the drone business, he can work as a programmer and earn a yearly salary of $25,000 with no additional monetary costs, and rent out his storefront at the $72,000 per year rate. There are no other costs faced by Charles in running this drone company. Identify each of Charles’s costs in the following table as either an implicit cost or an explicit cost of selling drones. Implicit Cost Explicit Cost The salary Charles could…