Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 7, Problem 1.2P
To determine
The economic profit of fitness trainer.
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Activity 2
Directions: Read the story carefully. Analyze the business. Then answer
the questions at the end of the story.
Anne and Cherry are friends since high school. Anne is good in baking and
Cherry is good in selling. To increase their income, they decided to put up an
online business of bakery products. They contributed 10,000 each to start the
business and decided to split the profit equally as business partners. The
friends agreed that Anne will be in charge of the production while Cherry will be
in charge of the online site for taking marketing and promotion. Cherry started
taking orders while Anne is busy on baking products. The business started to
get big orders from their regular clients and other who visited their online site.
After one year of operation, while Cherry continue with her regular work Anne
as in-charge of the production, started getting sick and advised to rest. Now,
Anne can no longer continue baking for their business.
1. What went wrong with the business?…
Megan used to work at the local pizzeria for $17,000 per year but quit in order to
start her own deli. Last year, she paid $4,000 rent each month, $4,500 for
employee payroll each month, and $1,500 for supplies each month. She was
planning on selling $2,500 worth of furniture but ended up bringing the furniture to
her new deli. She had total revenue of $150,000. She asked an accountant and an
economist to calculate her annual costs.
Accountant says cost is $120,000, and economist says her cost is $139,500.
Accountant says cost is $139,500, and economist says her cost is $120,000.
Accountant says cost is $10,000, and economist says her cost is $29,500.
Accountant says cost is $30,000, and economist says her cost is $10,500.
We have the results from our first Facebook ad campaign. The following table summarizes the
results broken down by age and whether the person seeing the add clicked through.
Age 40 or under
85
Age more than 40
65
Total
Clicked Through
150
Did Not Click
590
260
850
Total
675
325
1000
For our up(combing) (pun intended) campaign, I want to make it as effective as possible, a cut
above all other ad campaigns! I'm thinking that since 85 (or 56.7%) of the 150 people who
clicked through to our website are age 40 or less, we should focus our ads to only younger
people. I'm not great with number though, and since I know you had a stats class in college, I
wanted to get your opinion. Should we focus our adds only to those age 40 and under or should
we do something else?
Chapter 7 Solutions
Principles of Economics (12th Edition)
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