Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 21, Problem 3CQ
To determine
The components of accounting statements of a firm.
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Economics: Private and Public Choice (MindTap Course List)
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- To make a decision about opening a restaurant, what is the relevant cost for Aram? $50 thousand has been spent to date on renovating the place. Aram could be earning $ 100 thousand a year as a chef. Additional labor and other costs necessary to open the restaurant equal $ 60 thousand a year. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. $ 160 thousand a b. $ 60 thousand $ 210 thousand $ 110 thousand $ 50 millionarrow_forwardin your own personal life, what are some fixed and variable costs you have?arrow_forwardWhat is optimization? How does it blow up the myth about profit being a result of a mere increasedecrease interplay between cost and revenue? How much should a firm sell of a particular product in order to maximize profit? What factor does it have to consider in arriving at this decision?arrow_forward
- Another important law in economics is the “law of marginal returns or the law of increasing costs". Discuss how might you know that you are at a point of diminishing returns, or where more study will not benefit you like it did before? Identify any of the costs related to your decision about how much study is enough?arrow_forwardSuppose you have a production technology that can be characterized by a learning curve. Every time you increase production by one unit, your marginal cost decreases by $8. There are no fixed costs, and the first unit costs you $64 to produce. Use the given information to fill in the marginal cost of each unit, as well as the total cost and average cost of each level of output. Quantity Marginal Cost Total Cost Average Cost (Units) ($) ($) ($/unit) 1 $64 $64 $64 2 3 4 5 6 Suppose you receive a request for proposal (RFP) on a project for three units. Your break-even price for three units is _____ ($) Suppose that if you get the contract, you estimate that you can win another project for two more units. The break-even price for those next two units alone is _____ ($)arrow_forwardYou are planning to start a business. When calculating the costs. You have considered the costs of setting up your manufacturing plant, production, logistics, and all other costs except for the opportunity cost of your initial investment in this business. Which of the below is true? A) You calculated the economic cost. B) You calculated the explict costs. C) You calculated only the variable costs. D) You calculated only the fixed costs.arrow_forward
- Distinguish between explicit and implicit costs, giving examples of each. Why does the economist classify normal profit as a cost? Is economic profit a cost of production? Explain why or why not.arrow_forwardHow do fixed costs change over the long-term? Do costs get re-categorized into a variable cost when a firm is considering a longer time horizon?arrow_forwardList several fixed and variable costs associated with owning and operating an automobile. Suppose you are considering whether to drive your car or fly 1000 miles to Florida for spring break. Which costs—fixed, variable, or both—would you take into account in making your decision? Would any implicit costs be relevant? Explain.arrow_forward
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