MBA6008 Unit 3 Assignment 1

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MBA6008 – Global Economic Environment
Unit 3 Assignment u03a1 - Economic Problems

11/01/2014

Chapter 9, Discussion Question 2, p. 21
2. Distinguish between accounting profit, economic profit, and normal profit. Does accounting profit or economic profit determine how entrepreneurs allocate resources between different business ventures? Explain.
Accounting profit is the profit that would appear on your accounting statement that you would report to the government for tax purposes.
Economic profit is the result of subtracting all of your economic costs from revenue. By subtracting all of your economic costs for your revenue, you determine how your current business venture compares with your best alternative business venture.
Normal
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Answer the questions of 4a assuming product price is $32.
Total Product (Q)
AFC
AVC
ATC
MC
MR=P=32
TR=P*Q
- or +
(P-ATC)*Q
1
$60.00
$45.00
$105.00
$45.00
$32.00
$32.00
($73.00)
2
$30.00
$42.50
$72.50
$40.00
$32.00
$64.00
($81.00)
3
$20.00
$40.00
$60.00
$35.00
$32.00
$96.00
($84.00)
4
$15.00
$37.50
$52.50
$30.00
$32.00
$128.00
($82.00)
5
$12.00
$37.00
$49.00
$35.00
$32.00
$160.00
($85.00)
6
$10.00
$37.50
$47.50
$40.00
$32.00
$192.00
($93.00)
7
$8.57
$38.57
$47.14
$45.00
$32.00
$224.00
($105.98)
8
$7.50
$40.63
$48.13
$55.00
$32.00
$256.00
($129.04)
9
$6.67
$43.33
$50.00
$65.00
$32.00
$288.00
($162.00)
10
$6.00
$46.50
$52.50
$75.00
$32.00
$320.00

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