Gomez runs a small pottery firm. He hires one helper at $13,000 per year, pays annual rent of $5,500 for his shop, andspends $21,500 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns,and so forth) that could earn him $5,500 per year if alternatively invested. He has been offered $19,000 per year to workas a potter for a competitor. He estimates his entrepreneurial talents are worth $2,500 per year. Total annual revenuefrom pottery sales is $75,000.

1. What is the total annual cost of running the pottery firm?The total annual cost of running the…

Answered: Gomez runs a small pottery firm. He…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Chris P. Nugget runs a small fast-food chicken restaurant named "Poultrygeist.". He hires one employee at a cost of $28,000 per year, pays annual rent of $25,000 for his shop, and spends $75,000 per year on other inputs (food, supplies, etc.). He has $100,000 of his own funds previously invested in equipment (ovens, serving counters, etc.) that could earn him $8,000 per year if these funds were alternatively invested. Chris has been offered $80,000 per year to work as a restaurant manager for a competitor. Total annual revenue from the restaurant is $200,000. For all answers, be specific and show your work. a. How much are Mr. Nugget's "explicit costs" this year? b. How much are Mr. Nugget's "implicit costs" this year? c. What is Mr. Nugget's "accounting profit" this year? d. What is Mr. Nugget's "economic profit" this year? e. Put into words what your answer to part d. means for Mr. Nugget's decision about whether to stay at his restaurant or to close and take the offer at his…
4. Ikea Inc., a home remodeling business. The number of square feet they can remodel in a day is described by the Cobb-Douglas production function Q= F (L,K)= 4K5L0.5 where L is their number of workers and K is units of capital. The wage rate is $5 a day, and a unit of capital costs $20 a day. What is their minimum cost input combination for remodeling (Q=200) 200 square feet a day? What is the total minimum cost level? (15p)
Julius builds dining chairs that he sells for $200 a chair. His fixed costs are $1,000 (for workshop equipment). Each chair costs him $50 in materials to produce plus an extra $25 for each previous chair made that day, which reflects Julius's increasing exhaustion. (Thus, the first chair cost $50, the second costs $75, the third cost $100, etc.) Assume time requirements in producing a chair are not a factor. How many chairs should Julius produce each day?
Until recently, Mark worked as a financial advisor, earning $65,000 annually. Then he inherited a piece of commercial real estate that had been renting for $14,000 annually. Mark decided to leave his job and operate a sea food restaurant in the space he inherited. At the end of the first year, his books showed total revenues of $300,000, and paid a total cost of $200,000 for food, utilities, cooks, and other supplies: Show all your work including formulas learned to support your answer for each of the following: A) Calculate his explicit costs: B) Calculate his implicit costs. C) Calculate his accounting profits. D) Calculate his economic profits.
Suppose your current job pays you $225,000 a year. However, you are considering starting your own company. Based upon your research, you estimate your first-year total revenue to be $4,700,000. There are however several costs of running the company during this first year, such as the cost of materials which will equal $1,300,000, employees who will receive in total $1,500,000, utilities which will cost $750,000, and rent that will be paid to the landlord that equals $1,000,000. Based on this information, solve for both your accounting profit and economic profit during this first year. Also, based upon these profit values, state whether you are better off starting this company or staying in your current job.
Joe quits his computer programming job, where he was earning a salary of $70,000 per year, to start his own computer software business in a building that he owns and was previously renting out for $22,000 per year in his first year of business he has the following expenses: salary paid to himself, $40,000, rent, 50; and other expenses, $20,000. Find the accounting cost and the economic cost associated with Joe's computer software business. (Enter numeric responses using an integer) The accounting cost of Joe's business is 1 (Enter your response as an integer)
Please summarize this
Engle sells Lebanese sandwiches. The cost of ingredients (bread, meat, spices, etc.) to make a sandwich is US$2. Engle pays her employees US$60 per day. She also incurs a fixed cost of US$120 per day. What is Engle's total cost per day when she does not produce any sandwiches and does not hire any workers? $120 $2 $0 $60
Assume there is a linear isoquant where the input combination K = 10, L = 0 produces Q = 100. Assume that this isoquant has a MRTS (marginal rate of technical substitution) such that an increase in L by 1 unit requires the firm to give up – ½ unit of K. Assume PL = $1 and PK = $1. What is the smallest total cost necessary to produce Q = 100? $20 $10 $50 $100
ABC company creates specialty shipping bags that they sell to pharmaceutical companies across the globe. With their current equipment, ABC can produce 12,000 shipping bags for every 10 bundles of materials purchased. Every month (20 working days), ABC purchases 100 bundles of materials. Each bundle requires one (1) labor minute to process, and every labor hour costs an average of $14.00. Each week (5 working days), ABC pays $5,000 inoverhead costs, and equipment costs $600 a day to operate. (a). How many shipping bags does ABC produce in a standard month (20 working days)? Each workday (8 hours)? (b). What is the single-factor productivity for labor, per workday (8 hours)? Whatis the multi-factor productivity, for every dollar spent per shipping bag?
Compute the Total Cost of the following: Formula: TC = Price of L (Labor Q) + Price of K (Capital Q) Combination Output Units of Labor (L) Labor Costs Units of Capital (K) Capital Cost Total Costs A 10,000 5,000 5,000 B 10,000 1,000 9,000 Price of Labor per unit: php 50.00 Price of Capital per unit: php 100.00
Am I solving correctly? I don’t really remember how to derive the AC equation or graph these values that I have found.

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