38) Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000. A) His explicit costs are $330,000. B) His implicit costs are $170,000. C) His economic profit is zero. D) Only answers A and C are correct. E) Answers A, B, and C are correct.

38) Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000. A) His explicit costs are $330,000. B) His implicit costs are $170,000. C) His economic profit is zero. D) Only answers A and C are correct. E) Answers A, B, and C are correct.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 1.3P

See similar textbooks

Similar questions

9. . He is the chief cook and handles all purchasing. Tina is the hostess and manages the front of the house (restaurant talk for the dining area). She schedules the wait staff, ensures that customers are well taken care of, and pitches in to bus tables and refill drinks as needed. Tina also handles the financial aspects of the business and is responsible for bookkeeping and tax compliance. Two years ago, Tony and Tina became parents of a baby boy, Joseph, nicknamed “LJ” for Little Joe. Tina brings LJ to work each day, and both Rosellis as well as the restaurant staff help out watching him. Recently, the restaurant has grown busier, so Tony and Tina expanded the hours of operation. As a result, the staff rarely has any free time and Tina feels she has too much to handle. Tony and Tina are considering outsourcing their bookkeeping and tax-filing needs to a local accountant. Typically, Tina spends 18 hours per month on bookkeeping and taxes. This increases to 40 hours in April. She uses…
Peloton article: Why do you think Peloton simultaneously raised subscription rates while lowering the price of the hardware (the bike)? Group of answer choices Their instructors threatened to go on strike. Their raw material costs went down. They know they have existing customers locked in (due to transaction specific investments), so they are holding them up while trying to attract new customers.
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 $70,000
Q1. Pizzas sell for $13 each. Pat’s cost of producing pizzas is given below. Complete the table: Output (pizzas per hour) Total Cost (dollars per hour) Fixed Cost (1) Variable Cost (2) Average Cost (3) Average Fixed Cost (4) Average Variable Cost (5) Marginal Cost (6) Total Revenue (7) Marginal Revenue (8) 0 10 1 21 2 30 3 41 4 54 5 69 Write down the formulas for all the calculations in the table above, from columns 1 – 8:
Figure 7.1 shows a ﬁrm’s total revenue and total cost curves. If the ﬁrm were producing Q1, it should a. expand output to Q2 to maximize proﬁt. b. reduce output to zero to maximize proﬁt. c. expand output to Q3 to maximize proﬁt. d. expand output beyond Q3 to maximize proﬁt. e. continue to produce Q1, which is the proﬁt-maximizing output.
48. Whenever there is an improvement in the technology, the supply of the products using that technology will__________. a. Decrease b. None of these. c. Remain the same d. Increase
1. What is the formula to calculate profits? 2. Define Explicit and Implicit Costs. 3. Define Economic Profit and Accounting Profit. 4. Define Production Function, Marginal Product, and Diminishing Marginal Product. 5. Define Fixed Costs and Variable Costs. 5. Provide the formula/calculation for the following costs: Average Total Cost, Average Fixed Cost, Average Variable Cost, Marginal Cost. 6. Define Minimum Average Cost and Efficient Scale. 7. Define Economies of Scale, Diseconomies of Scale, Constant returns to scale.
Anthony quit his job where he was earning an annual salary of $48,000 to open his own business. Annually, he will pay $18,000 for rent, $120,000 for wages, $36,000 for raw materials. If he receives annual revenue of $230,000, then his accounting profit will be _____ and his economic profit will be _____. a negative; negative b negative; positive c positive; negative d positive; positive
7. Problems and Applications Q7 A profit-maximizing firm in a competitive market is currently producing 90 units of output. It has average revenue of $6, average total cost of $6, and fixed cost of $270. Complete the following table by indicating the firm's profit, marginal cost, and average variable cost. Profit Marginal Cost Average Variable Cost (Dollars) (Dollars) (Dollars) The efficient scale of the firm must be ________ 90 units.
Note: You need to show all your calculations within the table. Q1. Pizzas sell for $13 each. Pat’s cost of producing pizzas is given below. Complete the table: Output (pizzas per hour) Total Cost (dollars per hour) Fixed Cost (1) Variable Cost (2) Average Cost (3) Average Fixed Cost (4) Average Variable Cost (5) Marginal Cost (6) Total Revenue (7) Marginal Revenue (8) 0 10 1 21 2 30 3 41 4 54 5 69 Write down the formulas for all the calculations in the table above, from columns 1 – 8:
9. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.)
Only typed answer and please answer correctly It is possible to lower the average cost of production by expanding output beyond Q0 to Q1. Why wouldn't a firm expand its output to Q1? Group of answer choices a) Demand is not sufficient for consumers to buy Q1. b) The firm would suffer an economic loss at Q1 while it would break even at Q0. c) The firm's marginal revenue would be negative at Q1. d) The firm wants to maximize accounting profit rather than economic profit.