Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 7SQ
To determine
The impact of the decision to leave the teaching job and going for consulting business.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
QUESTION 4
Assume that there is an implicit cost. Which of the following must be true?
a. Accounting Profit > Economic Profit
b. Accounting Profit = Economic Profit
c. Accounting Profit < Economic Profit
d. Accounting Profit - Economic Profit = 0
Caroline opens a lemonade stand for two hours. She spends $15 for ingredients and sells $50 worth of lemonade. In the same two hours, she could have mowed the neighbor's yard and earned $10.
a. What are Caroline’s explicit and implicit costs?
b. What is Caroline’s accounting profit? What is her economic profit? Show how you calculated each profit.
You operate a cafe which generated total revenue was $60,000. Your costs for rent and supplies were $50,000. To start this business you invested an amount of your own capital that could pay you a $20,000 a year return. Your economic profit is:
a. $30,000.
b.$10,000.
c.‐$10,000.
d.‐$40,000.
Chapter 7 Solutions
Micro Economics For Today
Ch. 7.5 - Prob. 1YTECh. 7 - Prob. 1SQPCh. 7 - Prob. 2SQPCh. 7 - Prob. 3SQPCh. 7 - Prob. 4SQPCh. 7 - Prob. 5SQPCh. 7 - Prob. 6SQPCh. 7 - Prob. 7SQPCh. 7 - Prob. 8SQPCh. 7 - Prob. 9SQP
Ch. 7 - Prob. 10SQPCh. 7 - Prob. 11SQPCh. 7 - Prob. 1SQCh. 7 - Prob. 2SQCh. 7 - Prob. 3SQCh. 7 - Prob. 4SQCh. 7 - Prob. 5SQCh. 7 - Prob. 6SQCh. 7 - Prob. 7SQCh. 7 - Prob. 8SQCh. 7 - Prob. 9SQCh. 7 - Prob. 10SQCh. 7 - Prob. 11SQCh. 7 - Prob. 12SQCh. 7 - Prob. 13SQCh. 7 - Prob. 14SQCh. 7 - Prob. 15SQCh. 7 - Prob. 16SQCh. 7 - Prob. 17SQCh. 7 - Prob. 18SQCh. 7 - Prob. 19SQCh. 7 - Prob. 20SQCh. 7 - Prob. 21SQCh. 7 - Prob. 22SQCh. 7 - Prob. 23SQCh. 7 - Prob. 24SQCh. 7 - Prob. 25SQ
Knowledge Booster
Similar questions
- Do entry and exit occur in the short run, the long run, both, or neither?arrow_forwardIt is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss.arrow_forwardAn economist left her $100,000-a-year teachingposition to work full-time in her own consultingbusiness. In the first year, she had total revenueof $200,000 and business expenses of $150,000.She made ana. implicit profit.b. economic loss.c. economic profit.d. accounting loss but not an economic loss.arrow_forward
- Tim 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_forwardWhat is the difference between accounting profit and economic profit? Select one: a. Accounting profit is always lower because it is actually money. b. The difference is really not important. c. Accounting profit considers explicit financial costs and economic profit doesn't d. Economic profit considers implicit opportunity costs and accounting profit doesn't e. A and D are correctarrow_forwardhow does "Economic Profit" differs from the measurement of profit in other fields such as Accounting. How are costs measured in Economics?arrow_forward
- Caroline opens a lemonade stand for two hours. She spends $15 for ingredients and sells $50 worth of lemonade. In the same two hours, she could have mowed the neighbor's yard and earned $10. a. What are Caroline’s explicit and implicit costs? b. What is Caroline’s accounting profit? What is her economic profit? Show how you calculated each profit. The government imposes a $1,000 one-time license fee on all pizza restaurants. As a result, which of the following cost curves shift, and why or why not?a. Average total cost.b. Marginal Cost.c. Average Variable Cost.arrow_forwardWhich of the following is considered when calculating economic profit but not accounting profit? a. implicit cost b. explicit cost c. total revenue d. marginal cost e. All of the above are considered when calculating accounting profit.arrow_forwardBob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's economic and accounting profits in the short run ? A. Economic profits are minus $10 and accounting profits are $20 B.Economic profits are $20 and accounting profits are minus $10 C. None Which one?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_forwardRob quit his $4,000/month coffee shop position and started an ice-cream business. Rob does not get paid a salary for running the ice-cream business. When calculating the economic profit of the ice-cream business, his old $4,000 coffee shop salary is Select one: a. counted as part of the total revenue. b. counted as part of the implicit costs. c. counted as part of the explicit costs. d. ignored.arrow_forwardLinda sells 100 bottles of homemade ketchup for $10 each. The cost of the ingredients, the bottles, and the labels was $700. In addition, it took her 20 hours to make the ketchup and to do so she took time off from a job that paid her $20 per hour. Linda’s accounting profit is while her economic profit is . a. $700; $400 b. $300; $100 c. $300; negative $100 d. $1,000; negative $1,100arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning