Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 10, Problem 1SPA
To determine
The calculation of the
Expert Solution & Answer
Explanation of Solution
The opportunity cost of a firm includes the cost of the resources owned by the firm, the cost of resources supplied by the firm’s owner, and the cost of using the resources bought in the market.
The opportunity cost of JJVB includes the following as mentioned in table 1:
Table 1
Particulars | Cost (in $) |
Wages paid | 20,000 |
Interest forgone on $50,000 which could be used to pay for mortgage loan | 3,000 |
Income forgone | 30,000 |
Leisure forgone | 15,000 |
2,000 | |
Goods and services bought from other firms | 10,000 |
Total opportunity cost | 80,000 |
The total opportunity cost of JJVB is $80,000.
Economics Concept Introduction
Opportunity cost: The opportunity cost is the cost of the foregone alternative, that is, the loss of other alternative when one alternative is chosen.
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Students have asked these similar questions
Tim runs a shoe shine stand at the airport. Tim has no skills, no job experience, and no alternative job. The return to entrepreneurship in the show shine business is $10,000 a year. Tim pays the airport rent of $2,000 a year, and his total revenue from shining shoes is $15,000 a year. He spent $1,000 on a chair, polish, and brushes and paid for these items using a loan that has an interest rate of 20 percent a year. At the end of one year, Tim was offered $500 for his business and all its equipment. Calculate Tim'd annual explicit costs, implicit costs, and economic profit from his shoe shine business.
a. Explicit costs.
b. Implicit costs.
c. Economic profit.
Note:-
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Take care of plagiarism.
Answer completely.
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A factory supervisor faces the following table:
Quantity of laptops
Labour cost ($)
Rental of factory equipment ($)
Price per laptop ($)
Average cost
Total profit
1
1
10
9
11
2
4
10
9
7
3
9
10
9
6.3
4
16
10
9
6.5
5
25
10
9
7
6
36
10
9
7.6
7
49
10
9
8.42
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Despondent over the Red Sox's terrible season, Prof. Gruber decides to quit his day job and start a bicycle manufacturing firm in Kendall Square. As he starts looking into the bicycle manufacturing industry, he realizes it has some interesting features. First, he realizes that it operates as a competitive industry. Second, he finds that there are two technologies used by firms in the industry. Technology 1 uses solar power, and has a cost function C1(q)=q+4Q2+32 for q>0. Technology 2 uses electricity from the grid and is more efficient, with a cost function C2(q)=q+2Q2+32 for q>0. Assume that we are in the long run, so firms using both technologies can shut and leave the market at 0 cost, so that C(0)=0 for both technologies.
Now, suppose that the government of Massachusetts offers solar subsidies to 10 bicycle manufacturers. These subsidies are for $80 and the manufacturers receive these subsidies as long as they construct a bicycle manufacturing plant using the newly-invented…
Chapter 10 Solutions
Macroeconomics
Ch. 10.1 - Prob. 1RQCh. 10.1 - Prob. 2RQCh. 10.1 - Prob. 3RQCh. 10.1 - Prob. 4RQCh. 10.1 - Prob. 5RQCh. 10.2 - Prob. 1RQCh. 10.2 - Prob. 2RQCh. 10.2 - Prob. 3RQCh. 10.2 - Prob. 4RQCh. 10.3 - Prob. 1RQ
Ch. 10.3 - Prob. 2RQCh. 10.3 - Prob. 3RQCh. 10.4 - Prob. 1RQCh. 10.4 - Prob. 2RQCh. 10.4 - Prob. 3RQCh. 10.4 - Prob. 4RQCh. 10.5 - Prob. 1RQCh. 10.5 - Prob. 2RQCh. 10.5 - Prob. 3RQCh. 10 - Prob. 1SPACh. 10 - Prob. 2SPACh. 10 - Prob. 3SPACh. 10 - Prob. 4SPACh. 10 - Prob. 5SPACh. 10 - Prob. 6SPACh. 10 - Prob. 7SPACh. 10 - Prob. 8APACh. 10 - Prob. 9APACh. 10 - Prob. 10APACh. 10 - Prob. 11APACh. 10 - Prob. 12APACh. 10 - Prob. 13APACh. 10 - Technological and Economic Efficiency Use the...Ch. 10 - Prob. 15APACh. 10 - Prob. 16APACh. 10 - Prob. 17APACh. 10 - Prob. 18APACh. 10 - Prob. 19APACh. 10 - Prob. 20APACh. 10 - Prob. 21APACh. 10 - Prob. 22APACh. 10 - Prob. 23APA
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