Devlin is a computer programmer who earned $30,000 in 2019. But on January 1,2020 Devlin opened a landscaping business.Question FactsAt the end of the first year of operation, he submitted the information on the rightto his accountant.1. Devlin stopped renting out his cottage for $4,000 ayear and used it as his business premises.The accountant recorded the depreciation on Devlin's cottage during 2020 as$2,000.2. The market value of the cottage increased from$70,000 to S71,000.3. He spent $10,000 on materials, phone, utilities, etc.According to the accountant, what profit did Devlin make?4. He leased machines for $14,000 a year.5. He paid $5,000 in wages.6. He used $5,000 from his savings account, whichearns 5 percent a year interest.According to the accountant, Devlin's profit isO A. $165,800O B. $104,550OC. $30,0007. He borrowed $40,000 at 8 percent a year from thebank.8. He sold $200,000 worth of landscaping.9. Normal profit is $30,000 a year.O D. $28,000

Accounting profit = Revenue - total cost Profit = Sales – Depreciation - material cost – machine…

Answered: Devlin is a computer programmer who…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Consider a dynamic (two-period) representative firm's problem. This representative firm is given K unit of capital to produce in the current period. Firm can choose (current-period and future-period) labor demands and investment (to adjust future- period's capital stock) to maximize its present-value lifetime profit. Given that the market interest rate is r and the capital depreciation rate is & after production in each period. Let's further assume that this firm sells all the capital after future-period production. (a) Clearly definite the profit functions for both periods and write down this repre- sentative firm's problem. (b) Write down the optimal condition on investment. Intuitively explain the optimal condition. (c) Suppose K increases, graph the change of investment curve. Intuitively explain the changes on the graph you just drew.
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