Part I and Part II are independent. Please answer both parts. Part I: During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expense, raw materials, rent and utilities.  The firm’s owner has provided $750,000 of her own money instead of investing the money and earning a 10 percent annual rate of return. The accounting costs of the firm are                                                          $______________________ The opportunity cost is                                                                            $______________________ Total economic costs are                                                                         $______________________ Accounting profits are                                                                              $______________________ Economic profits are                                                                                $______________________   Part II: Higher personal taxes in the U.S. will affect personal disposable income which in turn will affect the domestic demand for goods and services. Costs of production and inputs however continue declining. What do you expect the U.S. output and prices in the near future. Assume we are moving from the old equilibrium to a new equilibrium. Please state clearly your assumptions and include a graph to support your answer.

Question

Part I and Part II are independent. Please answer both parts.

Part I: During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expense, raw materials, rent and utilities.  The firm’s owner has provided $750,000 of her own money instead of investing the money and earning a 10 percent annual rate of return.

The accounting costs of the firm are                                                          $______________________

The opportunity cost is                                                                            $______________________

Total economic costs are                                                                         $______________________

Accounting profits are                                                                              $______________________

Economic profits are                                                                                $______________________

 

Part II: Higher personal taxes in the U.S. will affect personal disposable income which in turn will affect the domestic demand for goods and services. Costs of production and inputs however continue declining. What do you expect the U.S. output and prices in the near future. Assume we are moving from the old equilibrium to a new equilibrium. Please state clearly your assumptions and include a graph to support your answer.

 

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Economics

Other

Related Economics Q&A

Find answers to questions asked by students like you.

Q: 9. If your_______rises as you make _________income, your taxes are progressive.total taxes, lessoutl...

A: Click to see the answer

Q: In the basic real business cycle model, where prices are fully flexible, shocks to the dynamic aggre...

A:  Real business cycle: Real business cycle refers to business cycle fluctuations to a large extent; t...

Q: Explain what is meant by opportunity cost of choice

A: The Opportunity cost of alternative is the benefits that has to forego which are available to us fro...

Q: Derive the elasticity of substitution for the Cobb-Douglas production Fonction. f(L,K) = ALαKβ

A: Elasticity of substitution measures the responsiveness of change in MRTS (Marginal Rate of Technical...

Q: We often work with production technologies that give rise to initially increasing marginal product o...

A: Production technology:True, because the slope of the production frontier is equal to the marginal pr...

Q: Stacked The Federal Reserve System and Open Market Operations_ Ask FRED The accompanying graph depic...

A: The Fed Fund Rate: This is the rate at which country’s financial institution (banks and credit union...

Q: Foreign aid: definition, pro & contra from the perspectives of recipients

A: Foreign aid:Foreign aid is a money, food or other resources that one country transfer voluntarily to...

Q: Can you explain why the answer is E?

A: Exchange rate between two currencies gives the price of one currency in terms of the other. For inst...

Q: A generalization of the fisher effect that can be applied to other variables is the relationship bet...

A: It is given that,According to the fisher’s effect, the real price growth is equal to the difference ...

Q: Determine whether each scenario is an example of intertemporal substitution and label each according...

A: Intertemporal Substitution:Intertemporal substitution is the determination to sacrifice prevailing c...

Q: Mary can wax 6 cars per day or wash 4 cars per day and John can wax 3 cars per day or wash 3 cars pe...

A: Opportunity Cost: the opportunity cost of any goods and services is the cost of other goods and serv...

Q: what is elastic. Trying to figure out if coffee is elastic or inelastic

A: Elastic demand: Elastic demand is the proportionate change in demand for the goods and services that...

Q: 1. (Quantity theory) In the long run, holding velocity growth constant, the growth of ________ is th...

A: Since we are entitled to answer only one question per request, we would be answering the first quest...

Q: How do I solve number 5

A: Monopoly is a market structure where only a single seller exists. While perfect competition is a mar...

Q: Will not change AD Increases AD Decreases AD Answer Bank a reduction in government spending increase...

A: Click to see the answer

Q: 22. A firm uses labor and capital, (L,K), to produce an output. The hourly cost of labor is $10, and...

A: The isocost line can be written as follows:

Q: I'm assuming for this problem I need to find the z-score first then find the value on the distributi...

A: The given information: 

Q: There are several ways that governments can increase or decrease the money supply. Match the descrip...

A: Money supply is the stock of money in circulation in an economy in a given time period.Open market o...

Q: The Federal Budget- Ask FRED The accompanying graph contains data on "U.S Individual Income Tax: Tax...

A: As can be seen from the image, when income tax was first introduced in 1913, the rate on the highest...

Q: All but which one of the following is a constraint on a deposit creation by the banking system ? Giv...

A: Banking system:Banking system refers to the process of accepting deposits from the general public fo...

Q: The table shows the demand schedule of a monopolist. Calculate marginal revenue and fill in the reve...

A: Monopoly Market: This is a market in which a single firm has control over the largest market share, ...

Q: Cost and revenue The graph presents the short-run costs and revenue for a monopolistically competiti...

A: Monopolistically competitive market: Monopolistic market refers to the market structure in which the...

Q: If planned expenditures are below actual production, what will happen to income?  Explain the proces...

A: If planned expenditure is below than the actual production, then the income will decrease. Because, ...

Q: Banks don't lend out all of the funds deposited because:     A) they need to make more mon...

A: Bank is financial institution that controlled and monitor by the central bank of the respective coun...

Q: Consider the following short-run production function: ܳ = −0.5L^2 + 10L. Suppose that the output of ...

A: The marginal revenue productfunction of a labor (MRPL) is identical and equal to the product of the ...

Q: Suppose we have 2 countries: Home and Foregin. Each has one asset: a banana tree. The bananas go bad...

A: A) The expected yield: The expected yield for home and foreign country without yield can be calculat...

Q: Chicago economists think that leakage in the circular flow model does not exist. If this is the case...

A: There are four major sectors in the economy i.e. households, firms, factor market and goods and serv...

Q: A current account deficit is generally a result of:     a large amount of U.S. purchases of ...

A: Current account deficit:The current account deficit refers the measures of a country's trade where t...

Q: Suppose the demand function for widgets is Q(p) = 60 – p, and all firms that produce widgets have to...

A: The given information: 

Q: A monopolist has a demand for its product that is P = A + BQ . It has no fixed costs. Marginal cost ...

A: The given information: Demand function is represented as follows: P = A+BQ                          ...

Q: Suppose a new regulation lowers the interest rates banks can offer on checking account funds. This w...

A: Money demand is the demand for cash balances by the individuals in the economy.Money supply is the t...

Q: Bose will incur fixed costs of $200,000 and unit variable costs of $25 on its new wireless Bluetooth...

A: Fixed cost is the cost that must be paid by the firm irrespective of its level of production.Variabl...

Q: A company purchased a CAD software for $5000 now and the annual payments of $500 per year for 6 year...

A: Preset worth:Present worth can be calculated as follows:

Q: 3. We often work with production technologies that give rise to initially increasing marginal produc...

A: Marginal product of labour is the change in output obtained by hiring one additional labour unit kee...

Q: If the reserve ratio requirement is 7%, a $2000 deposit will increase the money supply by (roughly) ...

A: Increase in money supply:Increase in money supply can be calculated as follows:

Q: Which two of the following financial insitituions offer checkable deposits included within the M1 mo...

A: M1 money supply:M1 money supply includes the coin, physical currency, demand deposit, travelers chec...

Q: The following cost-output data were obtained as part of a study of the economies of scale in operati...

A: Answer1:The shape of the curve of an output (enrollment)-cost graph is given below: 

Q: How can insurance companies offer a guarantee to pay for certain medical expenses? How do they deter...

A: Insurance companies offer to cover for the risks. The company main aim to minimize the risk of the p...

Q: Suppose that the excess reserves in Bank A increase by $700. If the required reserve ratio is 25 per...

A: To understand this we need to know that this reserve requirement of 25% per cent actually shows much...

Q: A survey reveals that on a small island 40 people have jobs, 10 people are looking for jobs, and 30 ...

A: First, let us define certain concepts related to the unemployment rate.Labor force: In an economy, l...

Q: A firm with pricing power (i.e. a price-maker) estimates that the elasticity of demand for its produ...

A: The relationship between Marginal Revenue and Elasticity of Demand is given byMR = P (1 + 1/A )where...

Q: Please help with this question

A: Hi, This question is too complex to be answered on this platform. I will, however, solve Hicksian De...

Q: How do you do number 3

A: STEP 1It is given that,The above table depicts the demand and cost structures of foreign language tr...

Q: The following two linear functions represent a market (thus one is a supply function, the other a de...

A: 1.) Market equilibrium price: Equate supply and demand function to get the value of market equilibri...

Q: Samantha Roberts has a job as a pharmacist earning $30,000 per year, and she is deciding whether to ...

A: (a)The business and economic profit:Business profit and economic profit can be calculated as follows...

Q: Part 1 and Part II are independent. Please answer both parts. Part I: You are advising company ABC o...

A: To answer this question we need to evaluate present value of payments in  both the cases.The present...

Q: During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expense...

A: In the US, a higher personal tax will affect the personal disposable income and also will affect the...

Q: PepsiPepsi and CokeCoke are considered to be substitutesubstitute goods.Use the line drawing tool to...

A: Substitute goods are the goods that can be used in place of each other. For example, Linux and Windo...

Q: How would you solve these

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and s...

Q: what issues do the onlinebusinesses face?  How are they similar to offline competition?    How are...

A: Online Business and Offline Business: The act of doing business virtually or doing business over the...