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(Module 52) Theo sells baby rattles at $3 per unit and each month he sells 3000 units out of the back of his wagon in the city park. Theo has no employees and estimates he could rent his wagon to another entrepreneur for $2000 each month. He also knows that he could earn about $5000 a month as a model. He pays $1 per unit for plastic, his only raw material.
a. Calculate Theo’s total monthly revenue.
b. Calculate Theo’s accounting profit. Show your work.
c. Calculate Theo’s economic profit. Show your work.
d. Should Theo continue to sell his baby rattles in the park? Explain.
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- 6. Which of the following describes the difference between economies of scale and economies of scope? The difference is that economies of scale are characterized by a firm's short run average total cost curve. Economies of scope deal with a firm's ability to add inputs to production. economies of scale are characterized by a decreasing long‑run average total cost curve due to specialization of labor. Economies of scope deal with firm's ability to produce related products due to similar production processes. economies of scale are characterized by an increasing long‑run average total cost curve. Economies of scope deal with a decrease in a firm's short run total cost. economies of scale are characterized by a firm's ability to add products that are interdependent. Economies of scope are characterized by a decreasing long‑run average total cost curve.Economics Question Suppose , unfortunately , your mathematics and economics professors have decided to give tests two days from now and you can spend a total of only twelve hours studying for both exams . After some thought , you conclude that dividing your study time equally between each subject will give you an expected grade of C in each course . For each additional three hours of study time for one of the subjects , your grade will increase one letter for that subject , and your grade will fall one letter for the other subject . a . Construct a table for the production possibilities and corresponding number of hours of study in this case .Susan Jones has a job as a pharmacist earning $45,000 per year, and she is deciding whether to take another job as the manager of another pharmacy for $55,000 per year or to purchase a pharmacy that generates revenue of $350,000 per year. To purchase the pharmacy, Susan would have to use her $20,000 savings and borrow another $90,000 at an interest rate of 8% per year. The pharmacy that Susan is contemplating purchasing has additional expenses of $100,000 for prescription and non-prescription drugs and lines of women’s and men’s personal hygiene products and cosmetics; $45,000 for one full time person; $20,000 for one part time person; $12,000 for rent; $2,500 for electricity; $1,300 for natural gas; $1,200 for telecommunications; and depreciation and amortization expenses are $5,500. Assume that income and business taxes are 35% and the repayment of the principal of the loan does not start before three years. Also assume that revenue is expected to grow at 5% per year and expenses at…
- You just got a job in Washington, D.C. You move into an apartment with some acquaintances. All your roommates, however, are slackers and do not clean up after themselves. You, on the other hand, can clean faster than each of them. You determine that you are 70 faster at dishes and 10 faster with vacuuming. All of these tasks have to be done daily. Which jobs should you assign to your roommates to get the most free time overall? Assume you have the same number of hours to devote to cleaning. Now, since you are faster, you seem to get done quicker than your roommate. What sorts of problems may this create? Can you imagine a trade- related analogy to this problem?The cost of the average consumer’s basket of goods and services in 2018 is roughly 10 times what it was in 1950. In other words, what the average consumer bought for $100 in 1950 would cost a consumer $1,000 in 2018. Does this mean that the purchasing power of the average consumer is one-tenth what it was in 1950? Explain your reasoning.Andie is considering leaving her job as attorney to pursue her passion by starting a dog grooming business. She currently takes home $6000 per month from her job. She pays $2000 per month to rent her house . if she were to start the dog grooming business, she would operate it out of the currently unused room at the back of her house and she would work at it fulltime. She would hire additional workers and pay them a total of$3000 per month , while spending $1000 per month on materials . she already has everything else she needs to start the business. What are the monthly economic costs of Andies potential dog grooming business.
- Imagine Tom's annual salary as an assistant store manager is $30,000, he owns a building that rents for $10,000 yearly, and his financial assets generate $1,000 per year in interest. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his financial assets to establish a bicycle repair shop. To run the business, he outlays $15,000 in cash to cover all the costs involved with running the business, and earns revenues of $50,000. Which of the following statements is true? Tom earns an accounting profit of $35,000. Tom has an opportunity cost of $41,000. All of these are true. Tom experiences an economic loss of $6000.10 - You were planning to spend Saturday working at your part-time job, but a friend asks you to go skiing. What is the true cost of going skiing? Now suppose that you had been planning to spend the day studying at the library. What is the cost of going skiing in this case? (Answer the question according to the definition of opportunity cost.) (5 points)Give typing answer with explanation and conclusion You have opened your own word-processing service. You bought a personal computer, and paid $5,000 for it. However, due to the cost changes in the computer industry, the current price of an equivalent machine is $2,500. You could sell any used machine for $1,000. If you were not word processing, you could earn $20,000 per year at an alternative job. Assume that the interest rate is 10%. You can also hire an assistant who can do everything that you can do for $20,000 per year (you would still continue to do word processing). One person using one computer can produce 11,000 typed pages per year, and the price per page for your service is $2. You are considering three options: (A) expand your business by hiring an assistant; (B) leave your business the way it is; (C) shut down. Fill in the Blank For Option B, economic profit is $_______.