a)
Total revenue
a)
Explanation of Solution
Quantity output = 2,000
Price = $2 per slice
Then,
Introduction: Total revenue is the multiplication of quantity output and the price per unit.
b)
Accounting profit
b)
Explanation of Solution
Introduction: The difference of total revenue and explicit cost refers to the accounting profit.
c)
The additional information that M needs to determine whether or not to continue operating the business of Meatloaf Stand.
c)
Explanation of Solution
M needs to know
Introduction: Economic profit refers to the difference between the revenue which is received from the sale and the costs of inputs including opportunity costs.
d)
The way through which M can determine whether or not to continue operating the business in the long run if numbers remain unchanged.
d)
Explanation of Solution
M needs to determine economic profit and whether or not he should continue operating the business in the position where he is getting at least normal profit. His economic profit would be:
From the economic profit of $3,300 it is clear that if M’s opportunity cost of time is less than or equal to the amount, then he will make at least normal profit and it is possible for him to continue operating the business of Meatloaf Stand.
Introduction: Economic profit refers to the difference between the revenue which is received from the sale and the costs of inputs including opportunity costs.
Chapter 52 Solutions
Krugman's Economics For The Ap® Course
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