MANAGERIAL ECONOMICS W/CONNECT >C<
9th Edition
ISBN: 9781260821116
Author: Baye
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 8CACQ
To determine
(a)
To calculate:
The accounting profits.
To determine
(b)
To calculate:
The economic profits.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Zubair purchases material by Rs. 20,000 per year and pays R. 10,000 for storage space. He
recently received two job offers from a famous marketing firm—one offer was for Rs.
250,000 per year, and the other was for Rs. 190,000. However, he turned both jobs down to
continue his business. If he sells 50 units of his product per year at a price of Rs. 10,000 each:
a. What are her accounting profits?
b. What are her economic profits?
The sole proprietor of the bookstore receives all accounting profits earned by her firm and a $28,000-a-year salary she pays herself. She has a standing salary offer of $44,000 a year if she agrees to work for a large corporation. If she had invested her capital company, she estimates that would have returned $32,000 a year. Last year, her accounting profit was $60,000. What was her economic profit? (Show your steps)
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
Chapter 1 Solutions
MANAGERIAL ECONOMICS W/CONNECT >C<
Ch. 1 - Prob. 1CACQCh. 1 - What is the maximum amount you would pay for an...Ch. 1 - Prob. 3CACQCh. 1 - Prob. 4CACQCh. 1 - Prob. 5CACQCh. 1 - Prob. 6CACQCh. 1 - Prob. 7CACQCh. 1 - Prob. 8CACQCh. 1 - Prob. 9CACQCh. 1 - Prob. 10CACQ
Ch. 1 - Prob. 11PAACh. 1 - Prob. 12PAACh. 1 - Prob. 13PAACh. 1 - Prob. 14PAACh. 1 - Prob. 15PAACh. 1 - As a marketing manager for one of the worlds...Ch. 1 - Prob. 17PAACh. 1 - Prob. 18PAACh. 1 - Prob. 19PAACh. 1 - Prob. 20PAACh. 1 - Prob. 21PAACh. 1 - Prob. 22PAACh. 1 - Prob. 23PAACh. 1 - Prob. 24PAA
Knowledge Booster
Similar questions
- Bonnie decides to open a company and earns JD50,000 in accounting profit the first year. When deciding to open the company, she took JD20,000 from her savings, which earned 5 percent interest. She also turned down three separate job offers with annual salaries of JD30,000, JD40,000, and $JD45,000. What is Bonnie's economic profit from opening her own company?arrow_forwardSuppose you run a small business in your building and you act also as a manager of your business. If you do not pay yourself a salary and rent of your building what effect will this practice have on the calculation of the firm’s accounting profit? Economic profit? Explain.arrow_forwardYour aunt is thinking about opening a hardware store. She estimates that it would cost $500,000 per year to rent the location and buy the stock. In addition, she would have to quit her $50,000 per year job as an accountant. Your aunt’s opportunity costs comprise * If your aunt thought she could sell $510,000 worth of merchandise in a year, what is your aunt’s accounting profit? *$10,000-$40,000$460,000$0Given the above situation, what is your aunt’s economic profit? *$10,000-$40,000$460,000$0arrow_forward
- Danielle decides to withdraw her savings of $70,000 and invest in starting her own clothing business. She normally earns $3,000 in interest from her savings. If Danielle earned an accounting profit of $60,000 last year, what was her economic profit?arrow_forwardYou are the manager of large farm located in Le Mars with 1,200 acres. Given the current recession, you have decided to diversify by producing both a corn & soybean. Based on corn price of $5.45 per bushel and soybean price of $14 per bushel, you expect to earn total revenue of $544,375 for both products. Min produce of 20,705 bushels of soybeans Using the Isorevenue , how many bushels of corn you will produce? From your answer to a) illustrate graphically the Isorevenue curve. Clearly identify horizontal and vertical axis on your grapharrow_forwardMike spends RM35,000 per annum on painting supplies and storage space. He recently received two job offers from a famous marketing firm – one offer was for RM 95,000 per year, and the other was for RM 105,000. However, he turned both jobs down to continue a painting career. If Mike sells 20 paintings per year at a price of RM 8,000 each: Question 1: What are his accounting profits? Question 2: What are his economic profits?arrow_forward
- Explain the difference between accounting and economic profit. Give two examples of when they differ.arrow_forwardBall Bearings, Inc., faces costs of production as follows: Quantity Total Fixed Costs Total Variable Costs (Dollars) (Dollars) 0 180 0 1 180 80 2 180 140 3 180 180 4 180 240 5 180 320 6 180 450 the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production. Quantity Total Cost Marginal Cost Average Fixed Cost Average Variable Cost Average Total Cost (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) 0 1 2 3 4 5 6 The price of a case of ball bearings is $80. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations. The firm's profit in this case is . (Note: If the firm…arrow_forwardGive typing answer with explanation and conclusion If Thomas made an accounting profit of $45,000 in his business last year, but he did not take into account of the implicit or opportunity costs of his resources he:arrow_forward
- Modified True or False: State whether each statement is true or false. If the statement is false, briefly explain why it is so, and then restate it to make it true. Zero economic profit implies zero accounting profit.arrow_forwardBall Bearings, Inc., faces costs of production as follows: Quantity (cases) Total Fixed Cost Total Variable Cost Total Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 0 $100 $0 $ 100.00 N/A N/A N/A N/A 1 100 50 $ 150.00 $ 100.00 $ 50.00 $ 150.00 $ 50.00 2 100 70 3 100 90 4 100 140 5 100 200 6 100 360 a. Calculate the company’s average fixed cost, average variable cost, average total cost, and marginal cost at each level of production.arrow_forwardDefine and explain the differences between accounting profit and economic profit.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning