ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Brian lives in New York City and runs a business that sells pianos. In an average year, he receives $726,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $426,000; he also pays wages and utility bills totaling $264,000. He owns his showroom; if he chooses to rent it out, he will receive $13,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Brian does not operate this piano business, he can work as a paralegal and receive an annual salary of $22,000 with no additional monetary costs. No other costs are incurred in running this piano business. Identify each of Brian's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The rental income Brian could receive if he chose to rent out his showroom The wholesale cost for the pianos that Brian pays the manufacturer The salary Brian could earn if he worked as a paralegal The…arrow_forwardDesmond works as an accountant making $80,000 per year. He is considering leaving his job to open an artisanal cheese shop. He estimates that he will need to spend $20,000 per year on space, $10,000 per year on supplies and $40,000 per year on staff. The shop will earn will earn $120,000 per year in revenue. Assuming his estimates are accurate, what will Desmond's accounting profit be? Assuming his estimates are accurate, what will Desmond's economic profit be? Please enter your solution without commas, dollar signs, or cents.arrow_forwardFaced with headquarters' desire to add a new product line, Stefan Grenier, manager of Bilti Products' East Division, felt that he had to see the numbers before he made a move. His division's ROI has led the company for three years, and he doesn't want any letdown. Bilti Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of ROI, with year- end bonuses given to divisional managers who have the highest ROI. Operating results for the company's East Division for last year are given below: Sales Variable expenses Contribution margin Fixed expenses Operating income Divisional operating assets The company had an overall ROI of 13% last year (considering all divisions). The new product line that headquarters wants Grenier's East Division to add would require an investment of $4,300,000. The cost and revenue characteristics of the new product line per year would be as follows: Sales Variable expenses Fixed expenses $ 12,900,000 60% of…arrow_forward
- (Use for Questions 1 - 3): The Burr Corporation's total cost function is TC 2004Q+2Q2 МС - 4+40 АС %3 200/Q + 4 +2Q where TC is the total cost in dollars, Q is quantity, MC is marginal cost per additional unit, AC is average cost per unit and P is product price Which rule should Burr Corp use to select a level of output that will maximize profit? а. *AC P -МC%3D0 с. MC AC d. :МС - Рarrow_forwardBased on the information in the table below, determine what quantity this firm should produce to maximize its profit. Quantity Marginal Cost Average Total Cost P=Marginal Revenue Total Cost 0 $ 100 1 $ 200 $ 300 $ 200 $ 300 2 $ 100 $ 200 $ 200 $ 400 3 $ 70 $ 157 $ 200 $ 470 4 $ 100 $ 143 $ 200 $ 570 5 $ 142 $ 142 $ 200 $ 712 6 $ 200 $ 152 $ 200 $ 912 7 $ 270 $ 169 $ 200 $ 1,182 8 $ 318 $ 188 $ 200 $ 1,500 Group of answer choicesarrow_forward1880 7+ ln(4 + p) Step 2 of 3: What is the revenue function R? Enter your answer as a function of x. The demand for a product is given by x = Answer F(p) R(x) =arrow_forward
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- Consider a firm that uses capital and labor as inputs and sells 5,000 units of output per year at the going market price of $10. Also assume that total labor costs to the firm are $45,000 annually. Assume further that the total capital stock of the firm is currently worth $100,000, that the return available to investors with comparable risks is 10 percent annually, and that there is no depreciation. Calculate the economic profit and accounting profit of this firm? Explain your answer.?arrow_forward3. Definition of economic costs Jacques lives in San Francisco and runs a business that sells guitars. In an average year, he receives $711,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $411,000; he also pays wages and utility bills totaling $279,000. He owns his showroom; if he chooses to rent it out, he will receive $1,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Jacques does not operate this guitar business, he can work as a financial advisor and receive an annual salary of $31,000 with no additional monetary costs. No other costs are incurred in running this guitar business. Identify each of Jacques's costs in the following table as either an implicit cost or an explicit cost of selling guitars. Implicit Cost Explicit Cost The wholesale cost for the guitars that Jacques pays the manufacturer The wages and utility bills that Jacques pays The rental income Jacques could…arrow_forward
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