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Lady_Fox [76]
3 years ago
7

Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings accoun

t. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn’t opened her own business, she would have earned a salary of $25,000. In her first year, Bev’s revenues were $30,000. Which of the following statements is correct?
a.Bev’s accounting profits exceed her economic profits by $300.
b.Bev’s total explicit costs are $25,300.
c.Bev’s total implicit costs are $300.
d.Bev’s economic profit is $4,700.
Business
1 answer:
lianna [129]3 years ago
3 0

Answer:

Option (d) is correct.

Explanation:

Here, the implicit cost is as follows:

Interest income she would have earned = $300

She would have a salary = $25,000

Total revenue from the business = $30,000

The total opportunity cost is as follows:

= Interest income + salary amount

= $300 + $25,000

= $25,300

Therefore,

Economic profits:

= Total revenue - Total Cost

= $30,000 - $25,300

= $4,700

Therefore, the Bev’s economic profit is $4,700.

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When one party to a transaction has incentives to engage in activities detrimental to the other party, there exists a problem of
Juli2301 [7.4K]

Answer: Moral hazard

Explanation: As per economic principles, if an individual increases the exposure to risk when covered by insurance, moral hazard happens, particularly when an individual takes further risks just because someone carries the burden of all those consequences.

There can be a moral hazard at which one party's policies may modify to the disadvantage of someone else after a business transaction has occurred. Moral hazard may arise through a type of asymmetric information in which the threat-taking group to trade is more aware of its motives than the person bearing the risk's implications.

Thus, from the above we can conclude that the correct option is A .

5 0
3 years ago
Zhang Company reported Cost of goods sold of $835,000, beginning Inventory of $37,200 and ending Inventory of $46,300. The avera
Lilit [14]

Answer:

Average inventory= $41,750

Explanation:

Giving the following information:

Beginning Inventory= $37,200

Ending Inventory= $46,300

<u>To calculate the average inventory, we need to use the following formula:</u>

Average inventory= (beginning inventory + ending inventory) / 2

Average inventory= (37,200 + 46,300) / 2

Average inventory= $41,750

6 0
3 years ago
Halliford Corporation expects to have earnings this coming year of $3/share. Halliford plans to retain all of its earnings for t
jeka57 [31]

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

6 0
3 years ago
Exercise 11-1 Compute the Return on Investment (ROI) [LO11-1] Alyeska Services Company, a division of a major oil company, provi
Jobisdone [24]

Answer:

1. 28.09 %

2.0.50 times

3.13.97 %

Explanation:

Margin = Profit / Sales × 100

            = $ 5,000,000 / $ 17,800,000 × 100

            = 28.09 % (2 decimal places.)

Turnover = Sales / Total Assets

               = $ 17,800,000 / $ 35,800,000

               = 0.50 times (2 decimal places.)

Return on investment = Divisional Profit Contribution / Assets employed in the  division × 100

                                    =  $ 5,000,000 / $ 35,800,000 × 100

                                    = 13.97 % (2 decimal places.)

8 0
3 years ago
Crystal's Performance Pizza is a small restaurant in Denver that sells gluten-free pizzas. Crystal's very tiny kitchen has barel
galben [10]

Answer:

Components of creation that can be differed with yield delivered are alluded to as factor elements of creation.  

Elements of creation that can't be differed with yield delivered are alluded to as fixed elements of creation.  

In given case, stove and laborers are utilized in pizza creation.  

It has been given that in short-run, number of stoves can't be changed however number of laborers can be changed.  

Along these lines,  

In short-run, these laborers are variable information sources, and the stoves are fixed data sources.

Number of Workers: 0

Output  (Pizzas): 0

Marginal Product of Labor  (Pizzas): 0

Number of Workers: 1

Output  (Pizzas): 70

Marginal Product of Labor  (Pizzas): 70

Number of Workers: 2

Output  (Pizzas): 120

Marginal Product of Labor  (Pizzas): 50

Number of Workers: 3

Output  (Pizzas): 160

Marginal Product of Labor  (Pizzas): 40

Number of Workers: 4

Output  (Pizzas): 190

Marginal Product of Labor  (Pizzas): 30

Number of Workers: 5

Output  (Pizzas): 200

Marginal Product of Labor  (Pizzas): 10

3 0
2 years ago
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