Bundle: Principles of Microeconomics, 7th + MindTap Economics, 1 term (6 months) Printed Access Card
7th Edition
ISBN: 9781305135451
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 13, Problem 2PA
Subpart (a):
To determine
An opportunity cost of running the hardware store.
Subpart (b):
To determine
An opportunity cost of running the hardware store.
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Your 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. What is your aunt’s opportunity cost of running a hardware store for a year? If your aunt thinks she can sell $510,000 worth of merchandise in a year, should she open the store? Explain.
Georgia quit her old job where she had been earning $50,000 a year to start her own business. She also invested all her savings into the
business, which had been earning $10,000 a year in interest. At the end of her first year, Georgia's accountant told her she had made
$70,000 in accounting profit. An economist would have told her she made an economic profit of:
of
Select one:
a. $10,000
b. zero
c. - $15,000
d. $20,000
Tim is thinking of opening a garment store. He estimates that it would cost $270000 per
year to rent the location and buy the merchandise. In addition, he would have to quit his
$63000 per year day job. Tim estimates he can sell $315600 worth of garments in a year.
a. What will be the accounting profit and economic profit for Tim?
b. If you are an economist, should you suggest opening the store? Why?
Chapter 13 Solutions
Bundle: Principles of Microeconomics, 7th + MindTap Economics, 1 term (6 months) Printed Access Card
Ch. 13.1 - Prob. 1QQCh. 13.2 - Prob. 2QQCh. 13.3 - Prob. 3QQCh. 13.4 - Prob. 4QQCh. 13 - Prob. 1CQQCh. 13 - Prob. 2CQQCh. 13 - Prob. 3CQQCh. 13 - Prob. 4CQQCh. 13 - Prob. 5CQQCh. 13 - Prob. 6CQQ
Ch. 13 - Prob. 1QRCh. 13 - Prob. 2QRCh. 13 - Prob. 3QRCh. 13 - Prob. 4QRCh. 13 - Prob. 5QRCh. 13 - Prob. 6QRCh. 13 - Prob. 7QRCh. 13 - Prob. 8QRCh. 13 - Prob. 1PACh. 13 - Prob. 2PACh. 13 - Prob. 3PACh. 13 - Prob. 4PACh. 13 - Prob. 5PACh. 13 - Prob. 6PACh. 13 - Prob. 7PACh. 13 - Prob. 8PACh. 13 - Prob. 9PACh. 13 - Prob. 10PA
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- Farmer McDonald gives banjo lessons for $20 an hour. One day, he spends10 hours planting $100 worth of seeds on his farm. What opportunity cost has he incurred?What cost would his accountant measure? If these seeds yield $200 worth of crops, doesMcDonald earn an accounting profit? Does he earn an economic profit?arrow_forwardQuestion 8 page 28 Janet spends $20,000 per year on painting supplies and storage space. She recently received two job offers from a famous marketing firm- one offer were for $100,000 per year, and the other was for $90,000. However, she turned both jobs down to continue a painting career. If Janet sells 25 paintings per year at a price of $8,000 each: a. What are her accounting profits? Show your steps leading to your answer b. What are her economic profits? Show your work!arrow_forwardCosts in the short run versus in the long run help mearrow_forward
- What happens to fixed cost as the quantity produced increases?arrow_forwardFamily Mart like inner city grocery stores, sometimes exist even though they do not earn economic profits. How can you explain this? It is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss. What are the different type of costs incurred in the short run and in the long run?arrow_forwardWhat is marginal cost? Fixed cost?arrow_forward
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