Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 8APA
To determine
Calculate the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Jason owns a small pizza restaurant, where he works full time in the kitchen. His
total revenue last year was $136,000, and his rent was $2,610 per month. He pays
his one employee $2,200 per month, and the cost of ingredients and overhead
averages $960 per month. Jason could earn $32,600 per year as manager of al
competing pizza restaurant nearby. What's Jason's accounting profit for the entire
year?
Your Answer:
Answer
Question 5
The sole proprietor of the "Books and More" bookstore receives all accounting profits earned by her firm
and a $28,000-a-yearsalary she pays herself. She has a standing salary offer of $35,000 a year if she
agrees to work for a large corporation. If she had invested her capital outside her own company, she
estimates that would have returned $22,000 a year. Last year, her accounting profit was $50,000. What
was her economic profit?
Douglas Fur is a small manufacturer of fake-fur boots in Ottawa. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the table. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars per pair) (Dollars per pair) 0 60 — — 1 160 2 220 3 270 4 340 5 450 6 630 On the following graph, plot Douglas Fur's average-total-cost (ATC) curve using the green points (triangle symbol). Next, plot its average-variable-cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal-cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $160, so you should start your ATC curve by placing a green point at (1, 160). For MC, plot the points between the integers; for example, the MC of increasing…
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
Knowledge Booster
Similar questions
- 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_forwardBrian 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_forwardTammy quit her job as a math teacher making $70,000 per year to start her own online business. The first-year revenue totaled to $200,000. During the first year of online business, Tammy paid $50,000 for the office rent and $20,000 for utilities and supplies. What is the amount of accounting profit generated from Tammy’s online business? $60,000 $200,000 $130,000 $70,000arrow_forward
- Douglas Fur is a small manufacturer of fake-fur boots in Philadelphia. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the following table. Quantity (Pairs) Total Cost Marginal Cost Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Dollars) (Dollars) (Dollars) (Dollars) (Dollars per pair) (Dollars per pair) 60 1 155 220 255 300 350 450 10:15arrow_forwardKim Hanson has just finished his first year as owner and manager of a new restaurant. His revenues, net of food and beverage cost (gross margin) were $250,000 and he paid his cooking and wait staff a total of $130,000. He also paid $50,000 for rent and utilities. Kim left his job of managing an Appleby’s restaurant, where he was paid an annual salary of $50,000, which is the typical salary for restaurant managers. He invested $200,000 of his own money (an inheritance from his aunt Hilda, which was in a mutual fund with an expected return of 12%) to buy the furniture and equipment for the new restaurant. Kim is depreciating these assets over a ten year period. This past year he spent $10,000 for repairs and other maintenance. He projects that he will usually spend this amount in the future on maintaining the restaurant’s fixed assets, and, if he does so, he could sell the furniture and equipment for an amount equal to his initial investment. Kim expects that next year his gross…arrow_forwardUntil recently, Mark worked as a financial advisor, earning $65,000 annually. Then he inherited a piece of commercial real estate that had been renting for $14,000 annually. Mark decided to leave his job and operate a sea food restaurant in the space he inherited. At the end of the first year, his books showed total revenues of $300,000, and paid a total cost of $200,000 for food, utilities, cooks, and other supplies: Show all your work including formulas learned to support your answer for each of the following: A) Calculate his explicit costs: B) Calculate his implicit costs. C) Calculate his accounting profits. D) Calculate his economic profits.arrow_forward
- Suppose that a small hair styling salon had revenues of $200,000 in a given year. The owner spent $15,000 on utilities, $72,000 on supplies (shampoo, conditioner, hair coloring and other chemicals, etc.), and $60,000 on equipment (mirrors, chairs, scissors, curling irons, etc.), including maintenance. The owner could have earned $70,000 working at another salon. A) What is the accounting profit for the hair styling salon? B) What is the economic profit for the hair styling salon? C) What would revenue have to be for the owner of the hair styling salon have to be for him to earn an economic profit of $10,000.arrow_forwardQuestion 20 of 20 Reggie owns and operates a cheese shop in the village of Somerset. Although Reggie has a degree in mechanical engineering and could easily go to work for his brother's company earning $76000 a year, his true passion is for cheese. Consider the list of Reggie's revenue and expenses from last year. Please use the information provided to answer the questions. Revenue from 2010 $90000 Rent $18000 Equipment $6000 Supplies $3000 What is Reggie's accounting profit? What is Reggie's economic profit? -$13000 $63000 $3000 O -$13000 -$63000 $3000 $63000 -$63000arrow_forwardPlease 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_forward
- Our firm produces two products: generators and solar panels. Name five economies of scale you would expect our company to leverage and explain how you would expect the company to leverage them. Our firm’s accountants have put together the following table of costs. Generators Solar Panels Fixed Costs $2 million $2 million Variable Costs $2 million $2 million Revenue $3 million $5 million The accountants have assured us that there are no places to save money. We are at our profit maximizing quantities of each product. We are as efficient as any firm could possibly be. In answering the questions below, do not just say lower costs or increase sales. Explain all your answers. If you cannot explain why you are taking an action, then you are just guessing.arrow_forwardlee, a programmer, earned $350,000 in 2010, but im 2011, he began to manufacture computer monitors. after one year, he submitted the following data to his account he stopped renting out his cottage for $35,000 a year and use it as his factory. the market value of cottage increased from $700,000 to $710,000 he spent $50,000 on materials, phone, etc. he paid $150,000 in wages he used $100,000 from his saving account, which pays five 5% interest a year he borrowed $400,000 at 10% a year from the bank he sold $1,600,000 worth of monitors normal profit is $250,000 a year compute for the following: lee's explicit cost lee's implicit cost lee's economic profitarrow_forwardJaime owns and manages a café in Collegetown whose annual revenue is $5,000. Annual expenses are as follows: Labor Expense Food and drink Electricity Vehicle lease Rent Interest on loan for equipment Amount $2,000 500 100 150 500 1,000 a. Calculate Jaime's annual accounting profit. $ b. Suppose Jaime could earn $1,000 per year as a recycler of aluminum cans, but she prefers to run the café. In fact, she would be willing to pay up to $275 per year to run the café rather than to recycle. Is the café making an economic profit? , (Click to select) the café is making an economic (Click to select) of $ Should Jaime stay in the cafe business? (Click to select) per year. c. Suppose the café's revenues and expenses remain the same, but recyclers' earnings rise to $1,100 per year. Is the café making an economic profit? (Click to select) ✓ the café is making an economic (Click to select) of $ per year. Should Jaime stay in the café business? (Click to select) d. Suppose Jaime had not had gotten a…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
