EBK STUDY GUIDE FOR MANKIW'S PRINCIPLES
7th Edition
ISBN: 8220103455312
Author: Mankiw
Publisher: Cengage Learning US
expand_more
expand_more
format_list_bulleted
Question
Chapter 13.1, Problem 1QQ
To determine
Farmer McDonald opportunity cost , accounting profit and economic profit.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Farmer McDonald gives banjo lessons for $20 an hour. One day, he spends10 hours planting $100 worth of seeds on his farm. What opportunity cost has he incurred?What cost would his accountant measure? If these seeds yield $200 worth of crops, doesMcDonald earn an accounting profit? Does he earn an economic profit?
Which of the following profits represent economic profit? Choose all that apply.
a.
Your company sells 1,000 cars per month. Each car costs $20,000. Your cost for parts is $4 million. Your labor costs are $3 million. Your total profit is $13 million.
b.
During the summer, you make ten go-karts and sell each one for $100. It costs you $200 in supplies. You could have made $500 during the summer if you had chosen to deliver phone books. Your total profit is $300.
c.
A restaurant makes $10,000 per month in total revenue. Supplies cost $2,000 per month, and labor costs are $3,000 per month. The restaurant's profit is $5,000.
d.
A high-end airplane company sells five private jets per year. Each jet is sold for $10 million. The profit margin is 12 percent. If you were to change course and make yachts with the same available resources, you would make no additional profit.
Marty used to be a bartender making $5,000 a year but he quit in order to become a clown that does shows at birthday parties. His clown car and costumes cost $7,000 and he did a lot of shows in the past year, making $13,000 in revenue but paying $2,000 in variable costs for balloons, gas, etc. Marty asked an accountant and an economist to calculate his profit. What did they report?
Chapter 13 Solutions
EBK STUDY GUIDE FOR MANKIW'S PRINCIPLES
Ch. 13.1 - Prob. 1QQCh. 13.2 - Prob. 2QQCh. 13.3 - Prob. 3QQCh. 13.4 - Prob. 4QQCh. 13 - Prob. 1QRCh. 13 - Prob. 2QRCh. 13 - Prob. 3QRCh. 13 - Prob. 4QRCh. 13 - Prob. 5QRCh. 13 - Prob. 6QR
Ch. 13 - Prob. 7QRCh. 13 - Prob. 8QRCh. 13 - Prob. 1QCMCCh. 13 - Prob. 2QCMCCh. 13 - Prob. 3QCMCCh. 13 - Prob. 4QCMCCh. 13 - Prob. 5QCMCCh. 13 - Prob. 6QCMCCh. 13 - Prob. 1PACh. 13 - Prob. 2PACh. 13 - Prob. 3PACh. 13 - Prob. 4PACh. 13 - Prob. 5PACh. 13 - Prob. 6PACh. 13 - Prob. 7PACh. 13 - Prob. 8PACh. 13 - Prob. 9PACh. 13 - Prob. 10PA
Knowledge Booster
Similar questions
- Farmer McDonald's gives banjo lessons for $20 an hour. One day, He spends 10 hours planting $100 worth of seeds on his farm. What opportunity cost has he incurred? what cost with his account in Measure? If these seeds yield $200 worth of crops, Does McDonald earn an accounting profitarrow_forwardWhat would change if you found a new niche market to sell your product and your sales jumped to $200,000 and your input costs went up to $30,000? What is your accounting profit? Economic profit? Should you stay in business? Would other firms enter into the market? please show work!arrow_forwardCosts should be managed to maximize profits. Comment on this statement.arrow_forward
- Consider the production process for a Vending Machine Service. Identify the fixed costs associated with running your small business. Identify the variable costs associated with running your small business. Discuss changes you might make in the long run.arrow_forwardYou own a business and make $100,000/year. You pay yourself $50,000 and have input costs of $20,000. You could rent the land for $5,000. Starting salary at a competing firm is $100,000. What is your accounting profit? Economic profit? Should you stay in business? Would other firms enter into the market? What would change if you found a new niche market to sell your product and your sales jumped to $200,000 and your input costs went up to $30,000? What is your accounting profit? Economic profit? Should you stay in business? Would other firms enter into the market?arrow_forwardTim is thinking of opening a garment store. He estimates that it would cost $270000 per year to rent the location and buy the merchandise. In addition, he would have to quit his $63000 per year day job. Tim estimates he can sell $315600 worth of garments in a year. a. What will be the accounting profit and economic profit for Tim? b. If you are an economist, should you suggest opening the store? Why?arrow_forward
- Question 8 page 28 Janet 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 profits? Show your work!arrow_forwardThe difference between economic profit and accounting profit is? Average cost Direct costs Economic costs Variable costs Marginal costsarrow_forward3.1 Every weekend more than 500 different vendors set up at the local farmers' market, selling a variety of items from homemade prepared foods to fresh produce. Yolanda rents a booth each weekend at the farmers' market to sell homemade tamales for $10 a dozen. Yolanda pays each of her four cousins $20 per hour to make the tamales on Friday evenings in the food truck she operates for week- day lunch service. Yolanda sells 60 dozen tamales each weekend at the farmers' market, which takes her cousins four hours to make each Friday. The cost of ingredients for all the tamales totals $240 and the booth at the farmers' market rents for $150 per weekend. a. What market structure does this business most resemble? What characteristics lead you to this conclusion?arrow_forward
- Which of the following profits represent economic profit? Choose all that apply. a. A restaurant makes $10,000 per month in total revenue. Supplies cost $2,000 per month, and labor costs are $3,000 per month. The restaurant's profit is $5,000. b. During the summer, you make ten go-karts and sell each one for $100. It costs you $200 in supplies You could have made $500 during the summer if you had chosen to deliver phone books. Your total profit is $300. c. A high-end airplane company sells five private jets per year. Each jet is sold for $10 million. The profit margin is 12 percent . If you were to change course and make yachts with the same available resources , you would make no additional profit. d. Your company sells 1, 000 cars per month . Each car costs $20,000 . Your cost for parts is $4 million . Your labor costs are $3 million . Your total profit is $13 million .arrow_forwardTo make a decision about opening a restaurant, what is the relevant cost for Aram? $50 thousand has been spent to date on renovating the place. Aram could be earning $ 100 thousand a year as a chef. Additional labor and other costs necessary to open the restaurant equal $ 60 thousand a year. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. $ 160 thousand a b. $ 60 thousand $ 210 thousand $ 110 thousand $ 50 millionarrow_forwardWrite a word or term that governs the following 1. are benefits given to the firm that originate from outside the firm. 2. exist when costs fall with larger size firm for technical and engineering reasons. 3. result from the way that larger firms can employ specialized workers.arrow_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 LearningExploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncPrinciples of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
- Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningMacroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Macroeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506756
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning