Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 9, Problem 1P
To determine
Accounting and economic profit.
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Gomez runs a small pottery firm. He hires one helper at $14,500 per year, pays annual rent of $7,500 for his shop, and spends $18,000
per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him
$5,000 per year if alternatively invested. He has been offered $23,000 per year to work as a potter for a competitor. He estimates his
entrepreneurial talents are worth $6,000 per year. Total annual revenue from pottery sales is $86,000.
Instructions: Enter your answers as a whole number.
Calculate the accounting profit and the economic profit for Gomez's pottery firm.
Accounting profit = $
Economic profit = $
Michael runs a small pottery firm. He hires one helper at $14,000 per year, pays annual rent of $8,000 for his shop, and spends $24,000 per year on materials. He has $50,000 of his own funds invested in
equipment (pottery wheels, kilns, and so forth) that could earn him $7,500 per year if alternatively invested. He has been offered $35,000 per year to work as a potter for a competitor. He estimates his
entrepreneurial talents are worth $4,000 per year. Total annual revenue from pottery sales is $75,000.
Michael's accounting profit is $. (Enter your response rounded to the nearest dollar and include a negative sign if necessary.)
Michael runs a small pottery firm. He hires one helper at $14,000 per year, pays annual rent of $8,000 for his shop, and spends $24,000 per year on materials. He has $50,000 of his own funds invested in
equipment (pottery wheels, kilns, and so forth) that could earn him $7,500 per year if alternatively invested. He has been offered $35,000 per year to work as a potter for a competitor. He estimates his
entrepreneurial talents are worth $4,000 per year. Total annual revenue from pottery sales is $75,000.
Michael's accounting profit is $ 29000. (Enter your response rounded to the nearest dollar and include a negative sign if necessary.)
Michael's economic profit is $
(Enter your response rounded to the nearest dollar and include a negative sign if necessary.)
Chapter 9 Solutions
Microeconomics
Ch. 9.2 - Prob. 1QQCh. 9.2 - Prob. 2QQCh. 9.2 - Prob. 3QQCh. 9.2 - Prob. 4QQCh. 9.5 - Prob. 1QQCh. 9.5 - Prob. 2QQCh. 9.5 - Prob. 3QQCh. 9.5 - Prob. 4QQCh. 9.8 - Prob. 1QQCh. 9.8 - Prob. 2QQ
Ch. 9.8 - Prob. 3QQCh. 9.8 - Prob. 4QQCh. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - Prob. 5DQCh. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 1RQCh. 9 - Which of the following are short-run and which are...Ch. 9 - Prob. 3RQCh. 9 - Indicate how each of the following would shift the...Ch. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4P
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