QUESTION 1: When Burton Cummings graduated with honors from the Canadian Trucking Academy, his father gave him a $350,000 tractor-trailer-rig. Recently, Burton was boasting some follows truckers that his revenues were typically $35,000 per month, while his operating costs (fuel, maintenance, and depreciation) amounted to only 18,000 per month. Tractor trailer rigs identical to Burton's rig rent for $15,000 per month. If Burton was driving for one of the competing trucking fims, he would eam $5,000 per month. All underlying work must be shown. A) How much is Burton's accounting cost? a) $18,000 b) $35,000 c) $33,000 d) $20,000 B) How much is Burton's economic cost? a) $18,000 b) $38,000 c) $20,000 d) $55,000 C) How much is Burton's economic profit? a) $17,000 b) $20,000 c) -$3,000 d) $15,000

Jeff, a 56 year old professor is subject to a 28% tax rate. He has had a family emergency and must withdraw $5,000 from his IRA to fund it. How much money will he owe the government for this withdrawal?

Tex-House builds and sells houses for $200,000 each.  The firms fixed costs are $3,000,000.  50 houses are built and sold each year. Profits total about $2,000,000.  The firm estimates that it can change its production process by adding 4,000,000 to investment and $1,000,000 to fixed costs.  This would reduce variable costs by $30,000 and increase output by 30 units.  To permit sales of the new output, prices would have to be lowered by $20,000 per unit.  Should the firm make the change? At the new production level, what price would make profits equal zero? Will the new production situation expose the firm to more or less risk?

ЕОС 13.5B Morgan took $400 000 out of their savings account to start an ice cream stand. The savings account paid 5% interest. In the first year, Morgan sold 12,000 batches of ice cream at a price of $3 each, and incurred costs of $12,000 which involved outlays of money. What was Morgan's economic profit in the first year?