Kelly is a clerk and she earns $80,000 per annum. She thinks her salary is too low and decides to start her own cake shop using her savings of $100,000, which earns an interest at 5% per annum. After one year, she earns an accounting profit of $80,000. What is Kelly’s economic profit? Show your calculations.  Is Kelly better off running her own shop? Briefly explain.

Q: Hamburg Variable Fixed Total Average ers Average Variable Cost Marginal Cost Costs Costs Costs Total…

A: The sum total of all production costs divided by the total quantity of output is known as the…

Q: Your uncle is thinking about opening a wine bar. He estimates that it would cost $400000 per year to…

A: Total cost = 400000 $ Accounting profit  = TR – TC = 600000  - 400000 = 200000 $ Economic profit =…

Q: Abe grows beautful orchids. His total fixed cost is $144 a day, and his average variable cost is $1…

A: Abe grows beautiful orchids. his total fixed cost is $144 aday, and his average variable cost is…

Q: 1. Definition of economic costs Lorenzo lives in Denver and runs a business that sells guitars. In…

A: Explicit cost is a cost that is actually incurred and paid in cash. Implicit cost is the benefit…

Q: What type of economic profit can most firms expect to make in the long run? Explain your answer.

A: A market is a place where buying and selling of goods and services takes place.

Q: explain the short run fixed costs and the variable cost in modern economics?

A: Cost refers to the amount of money that is  spent by the firm to produce a product . Cost   refers…

Q: Explain why it is not economical for a firm to operate under increasing returns and negative…

A: Solution: Increasing return: It is the first phase of production. In this phase every additional…

Q: Suppose that a small family farm sold its output for $110,000 in a given year. The family spent…

A: Total Revenue= $110000 Money spent on fuel= $20000 Money spent on seed, fertilizers, and pesticides=…

Q: Question Jake is leaving Shoe Warehouse to open his own shoe boutique. Jake currently earns $40, 000…

A: Economic profits are defined as the net gains made by the company after opportunity costs and other…

Q: Suppose Eleanor runs a small business that manufactures teddy bears. Assume that the market for…

A: The profit earned by a firm operating in a competitive market is the difference between the total…

Q: 1.4 You are given the following cost data: TFC 9 0 1 2 3 4 5 5678 6 7 8 25 25 25 25 25 25 25 25 25…

A: We must remember few concepts which are as follows:- Total cost = TFC + TVC  Where TFC is the total…

Q: Briefly explain using a graph whether given statement is true or false. ‘To maximise profit, a firm…

A: The perfectly competitive firm is a price taker and can sell any quantity of commodity at the market…

Q: Consider the firm whose MC, AC, AVC, AFC functions are shown in the following graph. (The following…

A: The expenses that are being incurred for conducting operations of the business are known as costs.…

Q: Microeconomics Q193515  Deadline passed If the price (P) of maple syrup is $4.00 per can, average…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Cecilia is a stockbroker who earned $150,000 in 2016. At the beginning of 2017, Cecilia wanted to…

A: Opportunity cost refers to the potential benefit that an individual, business, or investor misses…

Q: Melody owns and runs a hot yoga studio. Assume that Melody has no fixed costs and that her only…

A: the total cost when Melody hires two instructors show below

Q: Can economic profit ever exceed accounting profit? Explain.

A: Profit is the financial gain that a business or an individual earns after deducting all expenses…

Q: 2.5 After the Sears department store chain emerged from bankruptcy, its CEO Edward Lampert was…

A: The total costs incurred by a firm operating in a market include fixed costs and variable costs.…

Q: Consider the concepts of accounting profit and economic profit.  Suppose you are a consultant and…

A: Profit is the surplus value that is generated in a process of production, which usually accrues to…

Q: Draw a graph including AVC to illustrate a firm that is losing money, continues to operate, and…

A: The prevailing price, which is set by the relationship of supply and demand, is shown as a…

Q: Briefly explain the short run fixed costs and the variable cost in modern economics?

A: Short-run is the time period that is less than or equal to a year. The costs can be divided into two…

Q: 6.12 (Related to the Don't Let This Happen to Youin his autobiography, T. Boone Pickens, a…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: With the help of an example explain the difference between accounting and economic profit. Building…

A: The term perfect t competition refers to a theoretical market structure. during a perfect…

Q: 1] Briefly explain under what conditions would the total cost curve be horizontal.

A: (Since you have asked many questions, we will solve the first one for you. If you want any specific…

Q: 4. Bob produces flower pots for sale, which he designs and manufactures using 3-D printing…

A: Rent on building = $30,000 and rent on machinery is $20,000 per month. Total fixed cost =…

Q: Goldbar is an energy bar firm selling in a perfectly competitive market but is considering the…

A: A theoretical market structure is referred to as perfect competition. There are no monopolies under…

Q: As a manager of a house painting firm like the Queen Anne Painting Company, a perfectly competitive…

A: A firm will maximize its profit by producing the quantity of output at which the marginal revenue…

Q: The difference between accounting profit and economic profit is that accounting profit is the…

A: An explicit cost is the clearly stated costs that a business incurs. For example, employee wages,…

Q: You plan to open your own hamburger shop. After doing some research and planning, you have created…

A: Fixed cost is independent of output produced.  Marginal cost is the additional cost incurred in…

Q: This article about the closing of Sports Authority stores provides some rationale for why the chain…

A: The equilibrium price and quantity of a good sold in the competitive market are determined by the…

Q: Your uncle is thinking about to open a fish & chips restaurant. He estimated that it would cost…

A: In economics, explicit cost is the direct cost of choosing an alternative and make expenditure on…

Q: “A firm that earns only normal profit is not covering all its costs.” Do you agree or disagree?

A: Economic Cost consists of explicit cost and implicit cost. In other words it consists of sum of…

Q: One word The level of output of a firm where the price of the product is just enough to cover the…

A: Any firm always works towards achieving its objective of profit maximization and a firm maximizes…

Q: Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100…

A: ANS Profit is given by subtracting Total Cost (TC) from Total Revenue (TR). Mathematically it is…

Q: Briefly explain in (2-3 sentences) why a firm may choose to stay open in the short run even if their…

A: The economic profit is the difference between accounting profit and implicit cost. It can be…

Q: Hi, I do not understand why B is the correct answer for number 3. How do I know that this monoply is…

A: The monopoly is an imperfect market condition where there will be only a single seller present for…

Q: Our firm produces two products: generators and solar panels. Name five economies of scale you would…

A: Economies of scale allude to the cost advantages an organization gains with the increase in…

Q: Suppose Tim runs a small business that manufactures frying pans. Assume that the market for frying…

A: Perfect competition is a market structure where there are many buyers and sellers selling…

Q: List the conditions that must exist for a firm to make economic profits over the long run

A: In order for a firm to make economic profits over the long term, the following situations need to…

Q: "There are some technologies for which it is impossible to maximize profit in the long run. "…

A: Maximization of profits occur at the point where the marginal revenue and marginal cost are equal.

Q: Briefly explain what is meant by the term "fixed costs" and provide three examples of same.  What…

A: A) The term fixed expense alludes to an expense that doesn't change with an increment or decline in…

Q: Suppose that a small hair styling salon had revenues of $200,000 in a given year. The owner spent…

A: The economic profit is broader term and it considers the opportunity cost as well.