Microeconomics (13th Edition)
13th Edition
ISBN: 9780134744476
Author: Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 2SPA
To determine
The calculation of the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Joe runs a vegetable stall in the market building. Joe has no skills, no job experience, and no alternative employment.
Entrepreneurs in the vegetable stall business earn $16,000 a year.
Joe pays the rent of $2,500 a year, and his total revenue is $24,000 a year.
He borrowed $1,000 at 20 percent a year to buy equipment.
At the end of one year, Joe was offered $600 for his business and all its equipment.
What are Joe's explicit costs, implicit costs, and economic profit?
Joe's explicit costs are $ 2,700.
Joe's implicit costs are $
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?
Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job
and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out-
of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and
$3,000 per year for equipment.
Please enter your answers as whole numbers with no decimal places (ie. 5000 or $5000 not 5000.00
or "Five thousand dollars"). If you want to enter a negative number use a negative sign "-" and do not
use parenthesis (ie. -2000 or -$2000 not (2000) or (-$2000)).
What is Pat's accounting profit?
What is Pat's economic profit?
Did Pat make the right decision by becoming a personal trainer? (Yes or No)
Chapter 10 Solutions
Microeconomics (13th Edition)
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 - Prob. 14APACh. 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
Knowledge Booster
Similar questions
- Please answer letter B. Georgina is the owner and manager of a small café with monthly sales of 50,000 HK dollars and a monthly expenses of 42,500 HK dollars. Thus, having an accounting profit of 7,500 HK dollars. A. She could make 10,000 HK dollars a month somewhere else. She does, however, favor running the café. In fact, she would prefer to run the café than do anything else and would even pay up to 2,750 HK dollars per month. Is the café generating a profit, and should she continue running her business? B. Suppose the cafe’s revenues and expenses stay the same, but Georgina can now earn 11,000 HK dollars per month somewhere else. Is the cafe still making a profit? Explain.arrow_forwardYou are currently in a job as a chef in a restaurant earning $100,000 per year. You are considering opening up a restaurant in a building which you currently own. You estimate that, if you wanted to, you could rent out your building for $25,000 per year to another restaurant. Last year, your revenues and expenses from the restaurant were the following: Revenues $400,000Cost of Food $120,000Salaries/Wages $100,000Utilities $25,000Taxes $20,000 What is your accounting profit? Show your calculations What is your economic profit? Show your calculations Assuming that you are indifferent between being a chef or owning a restaurant, should you open up your restaurant? Explain why. Now suppose that instead of owning the building where your restaurant will be located, you had to pay rent of $25,000 per year for the building. Will your answers to parts 1-3 change? Show your calculations. Explain how and why your answers will change or…arrow_forwardJanet spends $20,000 per year on painting supplies and storage space. She recently received two job offers from a famous marketing firm- one offer were for $100,000 per year, and the other was for $90,000. However, she turned both jobs down to continue a painting career. If Janet sells 25 paintings per year at a price of $8,000 each: a. What are her accounting profits? Show your steps leading to your answer b. What are her economic profitsarrow_forward
- Question 5 Your uncle is thinking about opening a wine bar. He estimates that it would cost $400000 per year to rent the location and buy the stock. In addition he would have to quit his $120000 per year job as an accountant. Suppose your uncle thought he could sell $600000 worth of wine in a year. Which statement is true? His economic profit is $80000 which is less than he earns as an accountant so he should not open the wine bar Total cost of running the wine bar is $400000 and he should open the store since his economic profits would be $180000. Total cost of running the wine bar is $520000 and he should open the bar since his economic profits will be positive. His accounting profits are $80000 which is still enough to make it worth opening the wine bararrow_forwardAlex Kingsford is a mechanical engineer working for ABC Engineering in Melbourne. Alex owns aproperty in Dandenong, Victorian where he and his family are residing. He also runs a homebasedfood catering business, preparing food for local residents and school canteens. Cateringbusiness is well-structured. Alex works 15 days a month and earns a substantial income from thecatering services business. He is travelling from ABC Engineering workshop to his homebasedbusiness by car or sometimes Uber. When he lodged his tax return in July 2019, he has requested a deduction for a substantial amount of travelling expenses between the ABCEngineering workshop and home-based food business.Alex is now seeking your advice. With reference to relevant legislation and case law discusswhether Alex’s travelling expenses between the ABC Engineering workshop and his homebasedcatering business is an allowable deduction.arrow_forward2 You run a business selling used hand tools. The rent on your building is $1400/month. Utilities average $600 month. Your average cost to buy your used hand tools from a wholesaler is $9.5/tool. You spend S0.50/tool to package and individually price them. You have two employees in your store during the opening hours that sell the tools. Each employee gets a salary of $12/hour. Your store is open 10 hours/day, every day of the week. Over the course of a year, this averages out to 30 days'month. The average selling price for a used tool is $22. How many tools per month must be sold to make $4000 profit each month.arrow_forward
- DQ Saved Не Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate com Meyer Stores carries a specialty line of flavored syrups. One of the most popular of these is raspberry syrup which sells, on average, 55 bottles per week. Meyer's cost is $9 per bottle. Meyer has determined its order cost to be $54 and inventory carrying cost is 20 percent. Meyer is open for business 52 weeks per year. a. What is the EOQ for raspberry syrup? (Round up your answer to the next whole number.) Answer is complete but not entirely correct. EOQ 414 X units b. If Meyer orders the EOQ quantity each time, what will be the inventory turnover rate for raspberry syrup? (Hint Inventory turnover = Annual sales in units / Average inventory in units.) (Round your answer to 2 decimal places.) X Answer is complete but not entirely correct. Inventory turnover rate 13.82 X times per year Prev. 1 of 3 Next >arrow_forwardexplain what is meant by marketing fixed assets?arrow_forwardSolve the problem. 19) A company manufactures two ballpoint pens, silver and gold. The silver requires 3 min in a grinder and 4 min in a bonder. The gold requires 3 min in a grinder and 8 min in a bonder. The grinder can be run no more than 87 hours per week and the bonder no more than 51 hours per week. The company makes a $8 profit on each silver pen sold and $12 on each gold. How many of each type should be made each week to maximize profits? A) Silver pens: 0 Gold pens: 381 C) Silver pens: 1359 Gold pens: 381 B) Silver pens: 1 Gold pens: 382 D) Silver pens: 382 Gold pens: 1359arrow_forward
- 2) You are the chief financial officer for a firm that sells digital music players. Your firm has the following average-total-cost schedule: Total Cost $300 301 Quantity Average 600 players 601 Your current level of production is 600 devices, all of which have been sold. Someone calls, desperate to buy one of your music players. The caller offers you $550 for it. Should you accept the offer? Why or why not?arrow_forwardI asked this question it was not answered and I was charged please issue me a refund and answer this question. Dina is working for a consulting firm making $60,000 per year but considers starting her own consulting company. Dina has determined that to launch the business, she needs to invest $100,000 of her own funds. The annual cost of running the business will include $70,000 for the rent of the office space, $210,000 for employee wages, and $5,000 for materials and utilities. Dina plans to manage the business, which means that she will have to quit her current job. Suppose that the interest rate (or rate of return) on investments in the economy is 6%. Dina's total implicit cost per year is . Dina's total cost per year is .arrow_forwardEdward the entrepreneur takes 2 hours to cut a lawn, and he cuts 1,000 lawns per year. He uses solar-powered equipment (truck and mower) that will last forever- and can be sold at any time for $40,000. Edward could earn $11 per hour as a pedicurist. The interest rate is 10 percent. Given his current output level, compute his average cost of cutting lawns. $20 $24 $22 $28 $26arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning