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Asked Oct 11, 2019
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Question 1 Danny “Dimes” Donahue is a neighborhood’s 9-year-old entrepreneur. His most recent venture is selling homemade brownies that he bakes himself. At a price of $1.5 each, he sells 250. At a price of $1 each, he sells 300.  

Instructions: Use the midpoint method and round your answer to 2 decimal places. Do not include a minus sign.  

a. What is the elasticity of demand?

Question 2

Linda 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.

Instructions: Enter your answers as whole numbers.

Linda's accounting profit is:

Linda's econmica profit is:

Question 3 Gomez runs a small pottery firm. He hires one helper at $11,500 per year, pays annual rent of $7,000 for his shop, and spends $22,500 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 $6,500 per year if alternatively invested. He has been offered $22,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $4,500 per year. Total annual revenue from pottery sales is $80,000. 

Instructions: Enter your answers as whole numbers.

a. Calculate the accounting profit for Gomez’s pottery firm.

b. Now calculate Gomez's economic profit.

 

 

A firm has fixed costs of $60 and varlable costs as Indicated in the table below. Complete the table.
Instructions: Round your answers so that you enter no more than 2 declmal places.
Average Fixed
Cost
Average Total
Cost
Total
Total Fixed
Total Variable
Average
Marginal Cost
Total Cost
Product
Cost
Cost
Variable Cost
C
S60
1
45
2
85
3
120
4
150
185
225
270
8
325
9
390
10
485
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A firm has fixed costs of $60 and varlable costs as Indicated in the table below. Complete the table. Instructions: Round your answers so that you enter no more than 2 declmal places. Average Fixed Cost Average Total Cost Total Total Fixed Total Variable Average Marginal Cost Total Cost Product Cost Cost Variable Cost C S60 1 45 2 85 3 120 4 150 185 225 270 8 325 9 390 10 485

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Expert Answer

Step 1

Hey, Thank you for the question. According to our policy we can only answer 1 question per session. If you need further help, post the question again.

Given P1= $1.5, Q1 = 250 and P2= $1, Q2=300

Step 2

The mid-point for Price el...

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Q2-Q1 (Q1+Q2)/2 Price elasticity of demand (ep) =P2-P1 (P1+P2)/2 300 250 (300 250) 2 Therefore, e (excluding negative sign) 1 1.5 (1.5 1/2

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