Microeconomics (6th Edition)
6th Edition
ISBN: 9780134106243
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 11.2.12PA
To determine
Theimplicit cost in calculation of economic profit or loss.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Danielle decides to withdraw her savings of $70,000 and invest in starting her own clothing business. She normally earns $3,000 in interest from her savings. If Danielle earned an accounting profit of $60,000 last year, what was her economic profit?
A firm had sales revenue of $942 million last year.
It spent $463 million on labor, $88 million on
capital and $162 million on materials. The firm's
factory sits on land owned by the firm that could
be rented out for $2 million per year. What was the
firm's economic profit last year in millions of
dollars? (Do not include the word "million" or the
dollar symbol in your answer, just a number.)
Economist T. Yntema estimated the short-run total cost function of the United States
Steel Corporation in the 1930s to be as follows:
C=182.1+55.73Q
where C is total annual cost (in millions of dollars) and Q is millions of tons of steel
produced.
a.
b.
C.
d.
What was U.S. Steel's fixed costs?
If U.S. Steel produced 10 million tons of steel, what was its average
variable costs?
What was U.S. Steel's marginal costs?
If there were diminishing marginal returns to the variable inputs in the
production of steel, do you think that this equation provided a faithful
representation of U.S. Steel's short-run total cost function? Briefly explain.
Chapter 11 Solutions
Microeconomics (6th Edition)
Ch. 11.A - Prob. 1RQCh. 11.A - Prob. 2RQCh. 11.A - Prob. 3RQCh. 11.A - Prob. 4PACh. 11.A - Prob. 5PACh. 11.A - Prob. 6PACh. 11.A - Prob. 7PACh. 11.A - Prob. 8PACh. 11.A - Prob. 9PACh. 11.A - Prob. 10PA
Ch. 11.A - Prob. 11PACh. 11.A - Prob. 12PACh. 11.A - Prob. 13PACh. 11.A - Prob. 14PACh. 11.A - Prob. 15PACh. 11 - Prob. 11.1.1RQCh. 11 - Prob. 11.1.2RQCh. 11 - Prob. 11.1.3PACh. 11 - Prob. 11.1.4PACh. 11 - Prob. 11.1.5PACh. 11 - Prob. 11.2.1RQCh. 11 - Prob. 11.2.2RQCh. 11 - Prob. 11.2.3RQCh. 11 - Prob. 11.2.4RQCh. 11 - Prob. 11.2.5PACh. 11 - Prob. 11.2.6PACh. 11 - Prob. 11.2.7PACh. 11 - Prob. 11.2.8PACh. 11 - Prob. 11.2.9PACh. 11 - Prob. 11.2.10PACh. 11 - Prob. 11.2.11PACh. 11 - Prob. 11.2.12PACh. 11 - Prob. 11.3.1RQCh. 11 - Prob. 11.3.2RQCh. 11 - Prob. 11.3.3RQCh. 11 - Prob. 11.3.4PACh. 11 - Prob. 11.3.5PACh. 11 - Prob. 11.3.6PACh. 11 - Prob. 11.3.7PACh. 11 - Prob. 11.3.8PACh. 11 - Prob. 11.3.9PACh. 11 - Prob. 11.3.10PACh. 11 - Prob. 11.4.1RQCh. 11 - Prob. 11.4.2RQCh. 11 - Prob. 11.4.3RQCh. 11 - Prob. 11.4.4PACh. 11 - Prob. 11.4.5PACh. 11 - Prob. 11.4.6PACh. 11 - Prob. 11.4.7PACh. 11 - Prob. 11.4.8PACh. 11 - Prob. 11.4.9PACh. 11 - Prob. 11.4.10PACh. 11 - Prob. 11.5.1RQCh. 11 - Prob. 11.5.2RQCh. 11 - Prob. 11.5.3PACh. 11 - Prob. 11.5.4PACh. 11 - Prob. 11.5.5PACh. 11 - Prob. 11.5.6PACh. 11 - Prob. 11.5.7PACh. 11 - Prob. 11.5.8PACh. 11 - Prob. 11.5.9PACh. 11 - Prob. 11.6.1RQCh. 11 - Prob. 11.6.2RQCh. 11 - Prob. 11.6.3RQCh. 11 - Prob. 11.6.4RQCh. 11 - Prob. 11.6.5RQCh. 11 - Prob. 11.6.6PACh. 11 - Prob. 11.6.7PACh. 11 - Prob. 11.6.8PACh. 11 - Prob. 11.6.9PACh. 11 - Prob. 11.6.10PACh. 11 - Prob. 11.6.11PACh. 11 - Prob. 11.6.12PACh. 11 - Prob. 11.6.13PA
Knowledge Booster
Similar questions
- Please answer both questions from the reading.arrow_forwardUse the table below to answer questions about Benny: Total Revenue Cost of Lemonade Wages Interest $200,000 Please use dollar signs when answering: What is Benny's accounting profit? What are Benny's total implicit costs? $10,000 $4,000 $5,000 Benny the Lemonade Guy's forgone wages $80,000 Benny the Lemonade Guy's forgone interest $2,000 Economic depreciation $2,400 Normal profit $13,000arrow_forward1200 100.0 20.0 F20 100 -100 A company produces school buses. The graphs of the Cost function (red) and the Revenue function (blue) are given on the figure. (You may click on the figure to see a bigger version.) The horizontal axes represents quantity in number of units. Cost and Revenue are measured in thousands of dollars. Answer the following questions. 1. What are the fixed costs? Answer: thousand dollars. 2. Suppose the current level of production is 19 buses. Should the company produce 20 th bus? Answer "yes" or "no" 3. Between 0 and 100, approximately what level of production maximizes the profit? (Or minimizes the losses if the company doesn't make any profit). Answer:arrow_forward
- Ball Bearings, Inc., faces costs of production as follows: Quantity Total Fixed Costs Total Variable Costs (Dollars) (Dollars ) 0 120 0 1 120 60 2 120 80 3 120 100 4 120 140 5 120 200 6 120 320 Complete the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production. Quantity Total Cost Marginal Cost Average Fixed Cost Average Variable Cost Average Total Cost (Dollars) ( Dollars) (Dollars) (Dollars) (Dollars) 0 1 2 3 4 5 6 The price of a case of ball bearings is $60. Seeing that the company can't make a profit, the company's chief executive officer (CEO) decides to shut down operations. The firm's profit in this case is. (Note: If the firm suffers a loss, enter a negative number in this cell.) True or False: This was a wise decision. True False Vaguely remembering an introductory economics course, the chief financial officer tells the CEO it is better to produce 1 case of ball…arrow_forwardJason owns a small pizza restaurant, where he works full time in the kitchen. His total revenue last year was $136,000, and his rent was $2,610 per month. He pays his one employee $2,200 per month, and the cost of ingredients and overhead averages $960 per month. Jason could earn $32,600 per year as manager of al competing pizza restaurant nearby. What's Jason's accounting profit for the entire year? Your Answer: Answerarrow_forwardLegendary for his business and investment acumen, Warren Buffett is frequently called the “Oracle of Omaha” after his birthplace in Omaha, Nebraska. As one of the world’s wealthiest business owner-investors, business executives are always interested in any insight or opinion Mr. Buffett might wish to share. Explain each one of the following statements made by Warren Buffett. (Quotations from The Wall Street Journal, September 23, 2002.) “You cannot be the high-cost producer in a commodity business.”“Sometimes it’s not even any good to be the low-cost producer.”arrow_forward
- Suppose that a small hair styling salon had revenues of $200,000 in a given year. The owner spent $15,000 on utilities, $72,000 on supplies (shampoo, conditioner, hair coloring and other chemicals, etc.), and $60,000 on equipment (mirrors, chairs, scissors, curling irons, etc.), including maintenance. The owner could have earned $70,000 working at another salon. A) What is the accounting profit for the hair styling salon? B) What is the economic profit for the hair styling salon? C) What would revenue have to be for the owner of the hair styling salon have to be for him to earn an economic profit of $10,000.arrow_forwardWhen economist Jacob Viner first developed the envelope relationship, he told his draftsman to make sure that all the marginal cost curves went through both (1) the minimum point of the short-run average cost curve and (2) the point where the short-run average total cost curve was tangent to the long-run average total cost curve. The draftsman told him it couldn’t be done. Viner told him to do it anyhow. Why was the draftsman right?arrow_forwardBall Bearings, Inc., faces costs of production as follows: Quantity Total Fixed Costs Total Variable Costs (Dollars) (Dollars) 0 180 0 1 180 80 2 180 140 3 180 180 4 180 240 5 180 320 6 180 450 the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production. Quantity Total Cost Marginal Cost Average Fixed Cost Average Variable Cost Average Total Cost (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) 0 1 2 3 4 5 6 The price of a case of ball bearings is $80. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations. The firm's profit in this case is . (Note: If the firm…arrow_forward
- 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…arrow_forwardA firm had sales revenue of $1 million last year. It spent $600,000 on labor, $150,000 on capital and $200,000 onmaterials. What was the firm’s accounting profit?arrow_forwardExplainarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning