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
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.
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