If most firms in an industry are earning a 7 percent rate of return on their assets, but your business is earning 9 percent,your rate of economic profit isminus 2 percent.2 percent.9 percent.16 percent.

The economic profit is the difference between revenue and total cost. Here total cost includes…

Answered: If most firms in an industry are…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter7: Proudction Costs

Section: Chapter Questions

Problem 1SQ

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You turned down a job at ABC Corp last year that would have paid you $125,000 per year and started your own company. When you calculated your economic profit, it came out at $0. You expect the business will be exactly the same next year. ABC called and said you could still take the job. You should... A. Keep running your company as-is. B. Keep running your company but pay yourself less. C. Keep running your company but pay yourself more. D. Shut down your company and take the job at ABC.
Explain some of the different factors that would affect a firm’s profitability and what might make a firm’s profits particularly volatile.
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 bar
Strategic alliances and networking help to enhance the business competitiveness of a firm. Please discuss how and why it happens.
Peter runs a small local newspaper company. He can sell a newspaper at $2. He has fixed costs of $10,000. His variable costs are $1,500 for the first thousand newspapers, $1000 for the second thousand, and then $600 for each additional thousand newspaper.Can he make profit at current market price? What is the breakeven price in this business (assuming maximum production at 10,000 newspaper)?
Many firms in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?
True/False Firms maximize profits when MR> MC
QUESTION 6 Max earns a yearly salary of $120,000 per year from his job and $1,000 per year in interest on his savings. After he quits his job to start a company, he uses all his savings to purchase manufacturing equipment for his company. Max's first year in business his revenue was $300,000 and his explicit costs were $175,000. How much economic profit or loss does Max earn?
Morgan took $400 000 out of their savings account to start an ice cream stand. The savings account paid 5% interest. In the first year, Morgan sold 12,000 batches of ice cream at a price of $3 each, and incurred costs of $12,000 which involved outlays of money. What was Morgan’s economic profit in the first year?
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
Market shares of mat makers are in the table below. Firm Market Share (Percent) Made-to-last, Inc 20 Big Wheel, Inc 17 Magic Carpet, Inc 22 Supreme, Inc 17 Copra, Inc 24 What is the structure of the industry?
Read and analyze the following questions. Choose the letter of the correct answer. Write your answer on a separate sheet of paper. 1. Which of the following is a tool a company's understanding of its position relative to other companies that produce similar products or services? a. Environmental Analysis b. Industry Analysis c. SWOT Analysis d. Porter's Five Forces of Competitive Position Analysis 2. Which of the following refers to the acronym of SWOT analysis? a. Strengths, Weaknesses, Opportunities, Threats b. Strengths, Worsts, Opportunities, Threats Strengths. Weaknesses, Oligopoly, Threats d. Strengths, Weaknesses, Opportunities, Treats 3. Which of the following is the study of technological factor, political factors, global factor? a. Environmental Analysis b. Industry Analysis c. SWOT Analysis d. Porter's Five Forces of Competitive Position Analysis 4. What involves specifying the objective of the business venture or project and identifying internal and external factors that…

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If most firms in an industry are earning a 7 percent rate of return on their assets, but your business is earning 9 percent, your rate of economic profit is minus 2 percent. 2 percent. 9 percent. 16 percent.