Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 1P
To determine
Whether Amos McCoy is currently earning an economic profit or not.
Concept Introduction:
Amos McCoy is not currently making an economic profit. Difference between the revenue received from the sale of an output and the
Expert Solution & Answer
Explanation of Solution
Both alternatives are considered (i.e explicit and implicit cost) while estimating economic cost. Accounting cost does not take into consideration implicit cost. Opportunity cost associated with raising soyabean is being ignored while calculating accounting profit. While raising corn at a profit of $100 per acer, profit of $200 per acer is being ignored on soyabean. Economic loss of $100 is being incurred ($200-$100=$100). Amos McCoy is not currently making an economic profit. In the end, it should be concluded that he should grow soyabeans and get out of the corn business.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
8.1 The fixed costs at Harley Motors are $1M annually. The main product has
revenue of $9.90 per unit and $4.50 variable cost. This question is in three
parts.
Part 2: What is the annual profit (or loss) if 150,000 units are sold? (if a profit,
use a positive number and if a loss, use a negative number; do not use commas
or $ signs in your answer)
Text Problem 22-6
Question Help
The cost structure of a manufacturer of microchips is described in the table shown below.
The firm's fixed costs equal $10,000 per day. Calculate the average variable cost, average fixed cost, and average total cost at each output level. (Your answers
should be rounded to the nearest cent.)
Average
Fixed Cost ($)
Average
Total Cost ($)
Total Cost of
Output
(microchips per day)
Average
Variable Cost ($)
Output
$10,000
30,000
60,000
55,000
95.000
80,000
150.000
105,000
220,000
130,000
325,000
155.000
465.000
Using the following table a) construct the cost schedule for a firm operating in the short run b) Graph the average variable cost, average total cost and marginal cost curves.QuantityProduction Total Fixed costTotal Variable costTotal Cost Marginal Cost Average Fixed CostAverage Variable CostAverage Total Cost0 $160 0 $160 --- --- ---- ----1 $2002 $2303 $2504 $2605 $2806 $3207 $3908 $4909 $610
Knowledge Booster
Similar questions
- Tammy 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_forward2. You are the manager of production at a firm that sells high performance road bikes. Your firm has the following average-total-cost schedule: Quantity 548 Bikes 549 Bikes Average Cost $245 $246 Your current level of production is 548 bikes, all of which have been sold. Someone calls desperate to buy a bike for a local race. The caller offers $800 for the bike. Should you accept the offer? Why or why not? Show your calculations for full credit.arrow_forward3-1 Fixed-Cost Fallacy Describe a decision made by your company that involved costs that should have been ignored. Why did your company make the decision? What should it have done? Compute the profit consequences of the change.arrow_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_forwardQ9 ABC is a small business producing instructional modules for disabled children in public schools. The modules produced by ABC are not differentiated and the market price is $1,300 per module. ABC operates in a small office that rents for $600 a month and leases computer equipment that costs $480 per month. The chart lists other cost of production. Output (Q) Fixed (Instructional Cost Modules Per month) 0 1 2 3 4 5 6 7 8 9 10 Variable Total Average Average Cost Cost Fixed Variable (TC) Cost (AFC) (FC) (VC) 1,080 400 1,350 1,900 2,500 4,100 5,400 7,300 1,480 2,430 4,280 10,880 216 135 Cost (AVC) 475 Average Total Cost (ATC) 965 Marginal Cost (MC) 400 450 700 1) Complete the chart and plot the following graphs: AFC, AVC, ATV, MC. Be sure to label axis and graphs. 2) How many instructional modules ABC will produce, assuming it is profit- maximizer? Explain your answer and show that on the graph. 3) Determine ABC's profit and shade the profit on the graph. 4) Given the level of ABC's…arrow_forwardThe table below shows cost data for WipeOutSki Company, which manufactures skis for beginners. If the company's fixed costs are $30, what is the average total cost in B? Variable Fixed Total Average Cost $30 $30 $30 $30 $30 $30 $30 Quantity Cost Average Total Marginal Cost Cost Variable Cost Cost $10 $25 $45 $70 $100 $135 2 3 A 456arrow_forward
- 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: Answerarrow_forwardimage 1 : the following average-total-cost schedule: Quantity Average Total Cost (Number of players) (Dollars) 600 300 601 301 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. You ( should , or should not ) ? accept the offer. image 2 : Quantity Total Cost Variable Cost (Dozens of pizzas) (Dollars) (Dollars) 0 280 0 1 320 40 2 350 70 3 380 100 4 420 140 5 470 190 6 530 250 The pizzeria's fixed cost is ? .arrow_forwardQ: A farmer plane to harvest maize on his specific land. Discuss all factors of production whichhe need to harvest the whole season of crop. Also mentioned their rewards. Differentiate between economic profit and accounting profit, implicit explicit cost, total cost, variable cost, & average cost?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning