Homework Help is Here – Start Your Trial Now!
Business
Economics
c. Suppose the government imposes a 25 percent tax on accounting profits. This tax is levied only if a firm is earning positive accounting profits. What will your after-tax accounting profit be in the low-revenue case? $ -20,000 In the high-revenue case? $ 112,500 * What will your average after-tax accounting profit be? $ 48,750 * What will be your average after-tax economic profit? $ 3,750 8

c. Suppose the government imposes a 25 percent tax on accounting profits. This tax is levied only if a firm is earning positive accounting profits. What will your after-tax accounting profit be in the low-revenue case? $ -20,000 In the high-revenue case? $ 112,500 * What will your average after-tax accounting profit be? $ 48,750 * What will be your average after-tax economic profit? $ 3,750 8

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question

Please help me fix c. Thanks!

c. Suppose the government imposes a 25 percent tax on accounting profits. This tax is levied only if a firm is earning positive accounting profits. What will your after-tax accounting profit be in the low-revenue case? $ -20,000 In the high-revenue case? $ 112,500 * What will your average after-tax accounting profit be? $ 48,750 What will be your average after-tax economic profit? $ 3,750 8
Transcribed Image Text:c. Suppose the government imposes a 25 percent tax on accounting profits. This tax is levied only if a firm is earning positive accounting profits. What will your after-tax accounting profit be in the low-revenue case? $ -20,000 In the high-revenue case? $ 112,500 * What will your average after-tax accounting profit be? $ 48,750 What will be your average after-tax economic profit? $ 3,750 8
You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your current salary. You look into opening a small grocery store. Suppose that the store has annual costs of $150,000 for labor, $70,000 for rent, and $30,000 for equipment. There is a one-half probability that revenues will be $230,000 and a one-half probability that revenues willI be $400,000. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Enter a loss as a negative number. a. In the low-revenue situation, what will your accounting profit or loss be? $ -20,000 What will your accounting profit or loss be in the high-revenue situation? $ 150,000 b. On average, how much do you expect your revenue to be? $ 315,000 Your accounting profit? $ 65,000 Your economic profit? $ 5,000 Will you quit your job and try your hand at being an entrepreneur? Yes
Transcribed Image Text:You are currently a worker earning $60,000 per year but are considering becoming an entrepreneur. You will not switch unless you earn an accounting profit that is on average at least as great as your current salary. You look into opening a small grocery store. Suppose that the store has annual costs of $150,000 for labor, $70,000 for rent, and $30,000 for equipment. There is a one-half probability that revenues will be $230,000 and a one-half probability that revenues willI be $400,000. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Enter a loss as a negative number. a. In the low-revenue situation, what will your accounting profit or loss be? $ -20,000 What will your accounting profit or loss be in the high-revenue situation? $ 150,000 b. On average, how much do you expect your revenue to be? $ 315,000 Your accounting profit? $ 65,000 Your economic profit? $ 5,000 Will you quit your job and try your hand at being an entrepreneur? Yes
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Cash Flow
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS