Survey Of Economics
10th Edition
ISBN: 9781337111522
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 6, Problem 1SQ
To determine
The economic profit of the firm.
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M5
According to the theory of the firm, ceteris paribus, the value of the firm decreases with a decrease in _________________.
Select one:
a.total revenue
b.cost of capital
c.interest rates
d.total cost
Amal quits his job and gives up a salary of $50,000 per year to start software company. During Amal's first year in business, total revenue is $300,000, and his explicit financial costs are $250,000. What is Amal's economic profit from his first year in business?
Select one:
a. $0
b. $250,000
c. $50,000
d. $300,000
Chapter 6 Solutions
Survey Of Economics
Ch. 6.5 - Prob. 1YTECh. 6 - Prob. 1SQPCh. 6 - Prob. 2SQPCh. 6 - Prob. 3SQPCh. 6 - Prob. 4SQPCh. 6 - Prob. 5SQPCh. 6 - Prob. 6SQPCh. 6 - Prob. 7SQPCh. 6 - Prob. 8SQPCh. 6 - Prob. 9SQP
Ch. 6 - Prob. 10SQPCh. 6 - Prob. 11SQPCh. 6 - Prob. 1SQCh. 6 - Prob. 2SQCh. 6 - Prob. 3SQCh. 6 - Prob. 4SQCh. 6 - Prob. 5SQCh. 6 - Prob. 6SQCh. 6 - Prob. 7SQCh. 6 - Prob. 8SQCh. 6 - Prob. 9SQCh. 6 - Prob. 10SQCh. 6 - Prob. 11SQCh. 6 - Prob. 12SQCh. 6 - Prob. 13SQCh. 6 - Prob. 14SQCh. 6 - Prob. 15SQCh. 6 - Prob. 16SQCh. 6 - Prob. 17SQCh. 6 - Prob. 18SQCh. 6 - Prob. 19SQCh. 6 - Prob. 20SQCh. 6 - Prob. 21SQCh. 6 - Prob. 22SQCh. 6 - Prob. 23SQCh. 6 - Prob. 24SQCh. 6 - Prob. 25SQ
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- 1. This graph shows a company's marginal cost and marginal revenue functions. Marginal Cost and Marginal Revenue MR, MC, $/item 100 50 50 100 150 q, items | 200 -50 A. Label the graph, showing which curve is marginal revenue and which is marginal cost. B. What value of q will maximize revenue? c. What value of q will maximize profit? D. This company is currently producing 150 items. If they produce 2 additional items, estimate how the company's profit will change. Give a complete sentence expressing your answer. E. Suppose that we know that this company's fixed costs are S2000. Sketch a graph of Revenue and Cost functions that is consistent with the graphs above of MR and MC.arrow_forward2. Do the following 4 businesses have a positive profit? Should they shut down or not? Circle the correct answer. a. TR = $300 TC= $600 TFC=$350 TVC= $250 %3D %D 0000 Positive Profit or Loss Shutdown or Keep Operating b. P=$4.50 ATC=$4.00 AVC=$3.50 %3D Positive Profit or Loss Shutdown or Keep Operating c. TR = $800 TC= $600 TFC= $200 TVC= $400 %3| %3D Positive Profit or Loss Shutdown or Keep Operating d. P $7.00 ATC= $9.00 AVC= $8.00 %| Positive Profit or Loss Shutdown or Keep Operatingarrow_forwardNeed typed solutionarrow_forward
- A firm in a purely competitve industry has a typical cost structure. The normal rate of profit in the economy is 7 percent . This firm is earning $15 on every $150 investe by its founders. a. What is its percentage rate of return? b. is the firm earning an economic profit? If so, how large?arrow_forwardA small coffee house has the following costs: building and pizza oven rentals 100,000 labor 120,000owners salary given up 85,000 value of entrepreneurial talent 30,000 raw material 100,000 Bank loan payment 15,000 interest given up by owner 5,000 revenue for the firm is expected to be 420,000 for the year. a. Calculate the firms accounting profit and its economic profits b. Should the firm continue business in the long term if revenue and costs continue at the same level? Why or why not?arrow_forwardVicky quit her $ 75, 000 a year marketing executive job to open her own firm. In Vicky's first year in business her total revenue equaled $ 180,000. Vicky's explicit cost during the year totaled $ 80,000. To start her business Vicky took $ 50,000 from her savings account that was paying an interest of 10% annually. What is her economic profit for her first year in business? A. -$26,000 B. -$ 25,000 C. $ 25,000 D. $ 24,000arrow_forward
- 2arrow_forward1. What is profit? What is the difference between accounting profit and economic profit?2. What is the importance of ensuring profit maximization in an organization?arrow_forwardOutput Total Revenue ($) Total Variable Cost ($) Total Fixed Costs 1 1,000 750 500 2 2,000 1,250 500 3 3,000 2,000 500 4 4,000 3,000 500 5 5,000 4,500 500 What is the slope of the total revenue curve? At about how many computers per day do economic profits seem to be at a maximum? Graph the economic model of this firm.arrow_forward
- Question 5 Your uncle is thinking about opening a wine bar. He estimates that it would cost $400000 per year to rent the location and buy the stock. In addition he would have to quit his $120000 per year job as an accountant. Suppose your uncle thought he could sell $600000 worth of wine in a year. Which statement is true? His economic profit is $80000 which is less than he earns as an accountant so he should not open the wine bar Total cost of running the wine bar is $400000 and he should open the store since his economic profits would be $180000. Total cost of running the wine bar is $520000 and he should open the bar since his economic profits will be positive. His accounting profits are $80000 which is still enough to make it worth opening the wine bararrow_forward41. Under what conditions does the company's profit become maximum? 1. TR>TC 2. MR > MC 3. TR=TC 4. MR = MC. %3Darrow_forward10. If a firm is choosing to operate that means they have a a. positive accounting profit b. Positive or 0 economic profit c. Positive total revenue d. None of the abovearrow_forward
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