Calculates the book profit or loss as well as the economic gain or loss in each of the following situations:
A company with total revenue of $145 million, explicit costs of $110 million, and implied costs of $15 million
Answer -
Need to find -
Accounting profit & economic profit
Given in the question -
Revenue = $145 million
Explicit cost = $110 million
implied cost = $15 million
Accounting profit (Book profit) = It is the profit which a firm would gain from after paying off the explicit cost ( fixed cost (rent), variable cost (cost of raw material)) .
Economic profit = It is the profit which firm would gain after paying explicit cost ( fixed cost (rent), variable cost (cost of raw material)) as well as compensate the implicit cost ( opportunity cost )
Step by stepSolved in 3 steps
- Marginal Profit Yaster Breakfast Supplies is planning to manufacture and market a new toaster. After conducting extensive market surveys, the research department provides the following estimates: • a weekly demand of 313 at a price of $13 per toaster • a weekly demand of 202 at a price of $17 per toaster The financial department estimates that weekly fixed costs will be $1,379 and variable costs (cost per unit) will be $4. Assume: • the relationship between price and demand is linear the cost function in linear Use your models to predict the marginal profit when Yaster is producing and selling 261 toasters per week. Round to the nearest cent. $ per toasterarrow_forwardGiven , MR = -16Q + 395, MC= 4Q + 17 and TFC = 190. derive the total revenue (TR) and total cost (TC) functions, before calculating total profit when Q = 30. Use indefinite integrals to solve for the TR and TC functions.arrow_forwardThe total profit equation for the firm is p =-500-25x-10x^2 -4xy-5y^2+15y ;x +y =100 .where x and y represents output levels.Us8ng substitution method determine the profit maximizing output levels for x and y .arrow_forward
- Your college newspaper, The Collegiate Investigator, has fixed production costs of $90 per edition, and marginal printing and distribution costs of 50¢/copy. The Collegiate Investigator sells for 60¢/copy.a) Write down the associated cost, revenue, and profit functions.b) What profit (or loss) results from the sale of 300 copies of The Collegiate Investigator?c) How many copies should be sold in order to break even?arrow_forwardGlobal Corp. sells its output at the market price of $13 per unit. Each plant has the costs shown below Units of Output Total Cost ($) 0 8 1 11 2 17 3 26 4 38 5 53 6 71 7 92 What is the breakeven quantity? Enter 0 if total profit is always negative. Please specify your answer as an integer. What is the breakeven revenue? Enter 0 if total profit is always negative. Please specify your answer as an integer. What is the profit at each plant when operating at its optimal output level? Please specify your answer as an integer. How many units of output should each plant produce? Please specify your answer as an integer.arrow_forwardSport O Rama Equipment Inc., makes two different types of baseball gloves: a regular model and a catcher’s model. The firm has 900 hours of production time available in its cutting and sewing department, 300 hours available in its finishing department, and 100 hours available in its packaging and shipping department. The production time requirements and the profit contribution per glove are given in the following table: MODEL Production time (hrs): Cutting & Sewing Production time (hrs): Finishing Production time (hrs): Packaging & Shipping Profit/Glove ($) REGULAR 1 1/2 1/8 $ 5 CATCHER'S 3/2 1/3 1/4 $ 8 Assume that Sports O Rama Equipment Inc. is interested in maximizing the total profit contribution, answer the following: How many hours of production time will be scheduled in each department? What is the slack time in each department?arrow_forward
- True/False Average revenue is the derivative of total revenuearrow_forwardQuestion 34 A cell phone factory has a total production cost of Cx) - 150x+10000 and a revenue function R(x) - 200x, where x represents the number of cell phones made or sold. Determine the break-even point for this factory. Break-even point: (20,220) Break-even point: (200,40000) Break-even point: (40000,200) Break-even point: (220,20)arrow_forwardA studio manager stated that she would not turn down $2M per sequel right. If you paid $2M per sequel right, are you purchasing them for less than what they are valued?arrow_forward
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education