Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 14, Problem 11P
To determine
As per the Behavior economics, the assumptions that are in dispute from the traditional economics.
Concept Introduction:
While behavioral economics borrows its sources from psychology, the study of economic
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Q. Suppose you decide to start your own business when you graduate with a degree in economics. At the end of your first year in operation, you earn total revenue of $120,000. Your expenses during the year include the following: rent—$15,000, office supplies—$2,000, utilities—$6,000 and salaries paid to staff—$30,000. When you started your business, you used your saving of $10,000 for which could have earned interest of 5 per cent. Upon graduation, you had a job offer for $50,000 from a firm with whom you interviewed.
Based on the information above, estimate your accounting profit and economic profit.
Set all variables to their baseline values.9) At what level of output is average cost a minimum?10) What is average cost (AC) at that output?11) What is marginal cost (MC) at that output?
BASELINE COSTS
TC (BASE)
$175,113
AC (BASE)
$43.78
MC (BASE)
$64.12
NEW COSTS
TC (NEW)
$175,113
AC (NEW)
$43.78
MC (NEW)
$64.12
POLICY VARIABLES
Output
4,000
Fixed cost
25,000
Tax per unit
$0.00
AC(NEW)-MC(NEW)
-$20.34
Invent your own details to complete the parts of the business letters missing in the given data.
Information to be used:
Magnolia Ice Cream, one of the famous ice cream brands in the Philippines will
conduct an Ice Cream Exhibit focusing on the emerging Filipino flavors for the said
dessert. This will be held on April 9, 2021 at Sky Ranch Pampanga. Suppose that
you are the Manager of a developing ice cream factory that offers home-made ice
cream flavors. Write a business letter to the company saying that you are willing to
participate in the said event.
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