Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 7, Problem 1.8P
To determine

The economic cost, economic profit, and the accounting profit.

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Darryl Wilson owns Darryl's Deals on Wheels, a small used-car dealership in Humble, Texas. Wilson started the company three years ago, but he is still struggling to get a solid footing in the industry. The slow economy isn't helping—no one seems to have money to buy cars right now—and there is plenty of competition. The business provides the main source of income for his family, which includes his wife and two teenage daughters. Wilson has to make this business work to keep food on the table and to pay the typical expenses involved in raising a family. Finding customers is essential to success in the car sales business, but so is holding down costs. This means Wilson has to find "rolling stock" that is in demand and inexpensive, but that is not easy to do because all the other dealers in his area are in the same boat. They, too, are trying to snap up the best deals, and this is driving up the cost of inventory. So, controlling costs means looking at other features of the business, and…
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