QUESTION 3 Cassandra operates a stall in a luxury rug market that is highly competitive. She earns $3,000/day, with a stall hire cost of $200/day. As a result of a positive change in consumer preferences for luxury rugs, Cassandra experiences a large increase in the demand for her luxury rugs. Select the item from the list provided to make the following statements true: ✓ Cassandra's accounting profit is 3. total cost 1. accounting profit ✓Cassandra was making an economic loss in this market prior 2. -$200/day to the change in consumer demand. Fortunately, no new entrants arrive in the market with the increase in demand for 4. economic profit luxury rugs. If Cassandra manages to now achieve a normal profit in the short run, then Cassandra would also definitely be making a/an 5. economic loss 6. normal profit 7. $3,200/day The stall hire cost is a/an 8. $2,000/day 9. explicit cost 10. $0 11. $2,800/day 12. implicit cost for Cassandra.

QUESTION 3 Cassandra operates a stall in a luxury rug market that is highly competitive. She earns $3,000/day, with a stall hire cost of $200/day. As a result of a positive change in consumer preferences for luxury rugs, Cassandra experiences a large increase in the demand for her luxury rugs. Select the item from the list provided to make the following statements true: ✓ Cassandra's accounting profit is 3. total cost 1. accounting profit ✓Cassandra was making an economic loss in this market prior 2. -$200/day to the change in consumer demand. Fortunately, no new entrants arrive in the market with the increase in demand for 4. economic profit luxury rugs. If Cassandra manages to now achieve a normal profit in the short run, then Cassandra would also definitely be making a/an 5. economic loss 6. normal profit 7. $3,200/day The stall hire cost is a/an 8. $2,000/day 9. explicit cost 10. $0 11. $2,800/day 12. implicit cost for Cassandra.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.6IP

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