In 2019 Toni taught music and earned $30,000.Question FactsOn January 1, 2020, she quit teaching and started a home decorating business.1. Toni stopped renting out her basement for$6,000 a year and used it as her business officeUse the question facts to calculate Toni's opportunity cost of production and economic profit in the first year.instead.Toni's opportunity cost of production in 2020 is2. She paid $1,000 for a set of sample booksand $2,000 for a booth at the Home Show.O A. $69,5803. She earned interest at 4 percent a year on hersavings account balance.B. $5,000C. $68,000She took $2,000 from her savings account to buy asewing machine.D. $66,5804. At the end of 2020, Toni could have sold hersewing machine for $1,500.Toni's economic profit in the first year is5. She received a total revenue of $30,000 from herhome decorating business.O A. $27,0006. Normal profit is $30,000 a year.B. $30,000C. $- 39,580D. $- 36,580

Explicit Cost can be defined as the cost of the factor of production which is purchased from the…

Answered: In 2019 Toni taught music and earned…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 18 Table Average Average Average Total Total Fixed Variable Marginal Quantity Fixed Variable Cost Cost Cost Cost Cost Cost Cost $50 S50 SO -- -- -- 1 $150 A C D E F G H I S120 J K 3 M P $120 R Refer to Table. Based on the information given in the above table, the value of F will be O a. $200 O b.$50 O c. $150 O d. $100
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Product Price = Quantity Sold = Explicit Costs Implicit Costs = = $30 5 units $42 $18 Referring to the above table, it can be concluded that: O Economic Costs are $24. O Economic Profit is $210. O Economic Loss is $30. O Economic Profit is $90.
4 No production in the short-run and positive production in the long-run Suppose that the marginal cost curves in the short-run and in the long-run are identical for a certain firm, and that the short-run average cost curve is below the long-run average cost curve. Then for a certain price, we can show that the firm wants to produce in the short-run, but not in the long-run. In this question, we will investigate whether a reversed situation is possible. Consider the following production function: Q = L³K². The wage for labor (L) is w = 1. The cost of using capital (K) has two parts: the first is the rent that the firm needs to pay capitalists (r = 2), and the second is the maintenance cost (m = 2). The firm can change labor and capital in the long-run, but it can change only labor in the short-run. Thus, the long-run economic cost with (L,K) is wL+ (r+m)K, while the short-run economic cost of running the firm is wL + mko for given capital Ko. (Here we are implicitly assuming the…
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7. You are economic consultant for Jack, who farms raw cotton in a perfectly competitive market. One day he gives you the following data at his present level of production: Output = 2000 pounds, market price = $5.00, total cost =$8000, fixed cost=$2000, marginal cost=$5. The minimum of AVC occurs at {1000 pounds at $2} and the minimum of ATC at {1500 pounds at $3.5}. Please help Jack with the following questions based on the above figures: a. Draw a graph for the raw cotton market and a graph for Jack’s farm current situation that includes MC, ATC, and AVC, labeling all relevant points on axes with numerical values. Is Jack maximizing the profit (minimizing the loss)? Why or why not? Label the total profit/loss area. b. Suppose more farmers enter the raw cotton market until the market price is $3.00 per pound. On the same graphs, show the effect of this change in the market place. Would you like to suggest Jack leaving the market in the short run? Explain your answe
Which of the following most directly decreases profits if nothing else changes? O Changing your wardrobe O Giving your workforce a raise O Reducing costs O Lowering price
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QUESTION 3 Assume the following: • Price 10 Quantity: = 20 • Explicit Cost = 50 • Implicit Cost = 25 What does Economic Profit equal? a. 175 b. 150 Cc. 275 O d. 125
If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the and the vertical axis will represent OA. price, measured in dollars; quantity of goods produced O B. total costs measured in dollars; quantity of goods produced O C. quantity produced; both total revenue and total costs, measured in dollars. O D. quantity produced; total revenue and total variable costs, measured in dollars.
In the theory of the firm, profit is maximized at a rate of production at which O Economic profit is zero O Price is highest O Marginal revenue equals marginal cost O Marginal cost is at its lowest point

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