Bundle: ECON MICRO, 5th + Aplia, 1 term Printed Access Card
5th Edition
ISBN: 9781337192712
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 14, Problem 5.11P
To determine
As per the Behavior economics, the assumptions that are in dispute from the traditional economics.
Concept Introduction:
While behavioral economics borrows its sources from psychology, the study of economic
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Your Econ. Professor bought airline tickets to leave a conference early on Saturday morning. He later found out that he needed to present a paper later that Saturday, so he changed his tickets at a cost of $200. When he got to the conference, he discovered that he was scheduled twice: on Friday and on Saturday. He was given his choice of when to give the presentation. He said he would present on Saturday, because he paid an extra $200 in order to stay. Explain why you agree or disagree with his logic.
Q. Suppose you decide to start your own business when you graduate with a degree in economics. At the end of your first year in operation, you earn total revenue of $120,000. Your expenses during the year include the following: rent—$15,000, office supplies—$2,000, utilities—$6,000 and salaries paid to staff—$30,000. When you started your business, you used your saving of $10,000 for which could have earned interest of 5 per cent. Upon graduation, you had a job offer for $50,000 from a firm with whom you interviewed.
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CENGAGE MINDTAP
omework(Ch 13)
1. Definition of economic costs
Sean lives in Detroit and runs a business that sells guitars. In an average year, he receives $701,000 from selling guitars. Of this sales revenue, he
must pay the manufacturer a wholesale cost of $420,000; he also pays wages and utility bills totaling $247,000. He owns his showroom; if he chooses
to rent it out, he will receive $9,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Sean does not
operate this guitar business, he can work as a financial advisor, receive an annual salary of $32,000 with no additional monetary costs, and rent out
his showroom at the $9,000 per year rate. No other costs are incurred in running this guitar business.
Identify each of Sean's costs in the following table as either an implicit cost or an explicit cost of selling guitars.
Implicit Cost Explicit Cost
The salary Sean could earn if he worked as a financial advisor
The wages and…
Chapter 14 Solutions
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