EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
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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
Ball Bearings, Inc., faces costs of production as follows:
Quantity (cases)
Total Fixed Cost
Total Variable Cost
Total Cost
Average Fixed Cost
Average Variable Cost
Average Total Cost
Marginal Cost
0
$100
$0
$ 100.00
N/A
N/A
N/A
N/A
1
100
50
$ 150.00
$ 100.00
$ 50.00
$ 150.00
$ 50.00
2
100
70
3
100
90
4
100
140
5
100
200
6
100
360
a. Calculate the company’s average fixed cost, average variable cost, average total cost, and marginal cost at each level of production.
Until 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.
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