Your friend just opened their first credit card.What advice would you give them before they start making purchases?
2 answers:
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Maggie can buy 3 gifts
Solution:
Total budget $19
Each gift costs $4
Shipping fee $7
a. Total budget — Shipping fee = $19 - $7 = $12
Maggie’s got $12 more
Each gift costs $4
Number of gifts that Maggie can buy = =3
b. Let x represent the number of gifts.
19 = 7 +4x
Subtract -7 from both sides
19 - 7= 7 + 4x - 7
Now Simplify,
12 = 4x
Divide both sides by 4
x = 3
Answer:
a. $700,000
b. 6/7 or 85.7%
c. No they will not.
Explanation:
a. Jacobs will earn the normal salary that the other designers in the other companies are getting in addition to the incremental income he brings to the company as a result of his talents.
Incremental income = Revenue with Jacobs - Revenue without Jacobs
= 1,000,000 - 400,000
= $600,000
Jacobs earnings = Normal designer earnings + incremental income
= 100,000 + 600,000
= $700,000
b. Economic rent is the excess amount that the company is paying Jacobs over what it should normally cost to get a designer.
Normal cost of designer is $100,000. Company is therefore paying an economic rent of $600,000.
Proportion of Jacobs salary that is economic rent =
=
= 6/7 or 85.7%
c. The company hiring Jacobs will not be making an economic profit because for them to make an economic profit they would have to be making more than the $400,000 that the other firms make. They cannot make this amount because for them to do so they would have to reduce the amount they pay Jacobs. If they do so, Jacobs would leave for greener pastures and then they would be making the same $400,000 that the rest are making.