View previous attemptGomez runs a small pottery firm. He hires one helper at $14,500 per year, pays annual rent of $7,500 for his shop, and spends $18,000per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him$5,000 per year if alternatively invested. He has been offered $23,000 per year to work as a potter for a competitor. He estimates hecould use his talents to earn an additional $6,000 per year in consulting fees if he were working full time as a potter. Total annualrevenue from pottery sales is $86,000.Instructions: Enter your answers as whole numbers.a. Calculate the accounting profit for Gomez's pottery firm.b. Now calculate Gomez's economic profit.< Prev8 of 10Next >..... ...51°F Clearere to search

An individual or a firm runs a business with the primary motive of earning profit. Profit is 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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Chelsea Menken, of Providence, Rhode Island, recently graduated with a degree in food science and now works for a major consumer foods company earning $70,000 per year with about $54,000 in take-home pay. She rents an apartment for $1,200 per month. While in school, she accumulated about $38,000 in student loan debt on which she pays $385 per month. During her last fall semester in school, she had an internship in a city about 100 miles from her campus. She used her credit card for her extra expenses and has a current debt on the account of $7,000. She has been making the minimum payments on the account of about $240 a month. She has assets of $14,000. D a. Calculate Chelsea's debt payments-to-disposable income ratio. Round your answer to two decimal places. b. Calculate Chelsea's debt-to-income ratio. Round your answer to two decimal places. c. Comment on Chelsea's debt situation and her use of student loans and credit cards while in college.
Dr. Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his office manager's salary, $24,000 for the dental hygienist, $150,000 for insurance, and $6,000 for other miscellaneous costs. The normal profit from running his business is $20,000. A) His accounting profit is $350,000. B) His economic profit is $150,000. C) His economic profit is zero. D) His accounting profit is zero.
Tori is comparing two job offers at engineering and construction firms. One is in Atlanta at a starting salary of $40,000, and the other in Minneapolis at a starting salary of $43,000. Tori looks up the cost-of-living index (COLI) for each city and finds the following information: Atlanta’s COLI is 95.6 (costs are 95.6% of the national average). Minneapolis’s COLI is 111 (costs are 111% of the national average). Are the two salary offers comparable?
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?
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.
Please summarize this
Q44 Suppose a firm with the usual U-shaped cost curves is producing a level of output such that its short-run costs are as follows:ATC = $0.37 per unitAVC = $0.32 per unitAFC = $0.05 per unitMC = $0.43 per unitGiven these short-run costs, as the firm increases its output, ... a. The point of diminishing average product of the variable factor has not yet been reached. b. The average product of the variable factor must be increasing. c. The marginal product of the variable factor is at its minimum point. d. The marginal product of the variable factor must be increasing. e. The marginal product of the variable factor must be decreasing.
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?
Am I solving correctly? I don’t really remember how to derive the AC equation or graph these values that I have found.
What is the trend in cost?

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