1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
JulsSmile [24]
3 years ago
11

Chris owns his own business restoring antique cars. Last year, he restored 24 cars, which he sold for $1,100,000. The parts and

supplies necessary for the restoration totaled $400,000. He paid $360,000 to his six employees and a salary of $110,000 to himself. The rent and utilities on his building were $80,000. Recently, Chris received an offer to work as Jay Leno’s personal auto restorer, at a salary of $275,000. Chris also received a $180,000 offer to host a car-related reality TV show for the Discovery Channel. Chris can only work one job.
1. What is Chris's accounting cost?
a. $950,000.
b. $1,115,000.
c. $760,000.
d. $840,000.
What is his accounting profit?
a. $15,000.
b. $260,000.
c. $340,000.
d. -$150,000. .
2. What is Chris's economic cost?
a. $1,115,000.
b. $345,000.
c. $165,000.
d. $950,000.
What is his economic profit?
a. $755,000.
b. $935,000.
c. $150,000.
d. -$15,000.
3. Comparing what Chris earns in his current job—both his salary and his company's accounting profit—with his best outside offer, you can conclude that economic profits and losses show:_____.
a. how much an individual would earn in the individual's next best alternative minus how much he or she currently earns?
b. how much an individual currently earns minus how much the individual would earn in his or her next best alternative?
Business
1 answer:
Temka [501]3 years ago
7 0

Answer:

  1. a. $950,000.
  2. $150,000.
  3. a. $1,115,000.
  4. d. -$15,000.
  5. b. how much an individual currently earns minus how much the individual would earn in his or her next best alternative.

Explanation:

1. Chris's accounting cost

The accounting cost is the explicit cost of the business. The normal costs so to speak;

= Parts and supplies necessary for the restoration + Salaries to employees + Salary to himself + Rent and utilities

= 400,000 + 360,000 + 110,000 + 80,000

= $‭950,000‬

2. Chris's accounting profit

= Revenue - Accounting cost

= 1,100,000 - 950,000

= $150,000

3. Chris's economic cost

These are explicit + implicit (opportunity) cost.

The opportunity cost is the next best alternative which would have been the $275,000 if he had worked at Jay Leno’s personal auto restorer.

He would therefore forfeit the salary he earns now of $110,000.

= Accounting cost + Salary foregone - Salary

= 950,000 + 275,000  - 110,000

= $1,115,000

4. Chris's economic profit

= 1,100,000 - 1,115,000

= -$15,000

5. b. how much an individual currently earns minus how much the individual would earn in his or her next best alternative.

You might be interested in
Why is it important to prioritize a list of financial goals?
adell [148]
It’s important for your future. So you won’t be some kind of debts. It’s always better to plan rather than doing things last minute.
6 0
3 years ago
Marissa, a product manager, thinks her company's InstaCup coffee maker is currently in the growth stage of the product life cycl
Elenna [48]
Increased, decreased or remained the same.
6 0
3 years ago
A three-year annuity-immediate will be issued a year from now with annual payments of 5,000. Using the forward rates, calculate
vladimir1956 [14]

Answer:

13,152.5

Explanation:

Given the the above parameters as mentioned in the question

To calculate the PV (Present Value)

We have PV = 5000 * 1.05 * [ 1/(1.0575)² + 1/(0.625)³ + 1/(1.065)⁴]

PV = 5000 * 1.05 * (0.8942094350 + 0.8337064929 + 0.7773230908) =

=> PV = 5000 * 1.05 * 2.5052390187

= 13,152.50

Therefore, in this case, using the forward rates, the present value of this annuity a year from now is 13,152.50

6 0
3 years ago
Suppose GDP consists of wheat and rice. In 2005, 20 bushels of wheat are sold at $4 per bushel, and 10 bushels of rice are sold
Vesnalui [34]

Answer:

Nominal GDP is $100, real GDP is $50, and the GDP Deflator is 200

Explanation:

Given that:

Base year = 2004

2004:

20 Bushels of wheat = $2 per bushel

10 Bushels of rice = $1 per bushel

2005:

20 Bushels of wheat = $4 per bushel

10 Bushels of rice = $2 per bushel

Nominal GDP

GDP deflator = (Nominal GDP / Real GDP) * 100

2005 Nominal GDP:

Final value of goods at current year prices:

(20 * $4) + (10 * $2)

$80 + $20 = $100

2005 Real GDP:

Final value of goods at base year prices :

(20 * $2) + (10 * $1)

$40 + $10 = $50

Deflator :

(Nominal GDP / Real GDP) * 100

($100 / $50) * 100

2 * 100 = 200

= 200

4 0
3 years ago
On the far left side of the AS curve, the economy is producing ________ potential, and on the far right of the curve, it is prod
MrRa [10]

On the far left side of the AS curve, the economy is producing below potential, and on the far right of the curve, it is producing above potential.

<h3>What is the AS curve?</h3>

The aggregate supply curve is a curve that is used to show the total quantity of real GDP that is supplied in an economy at a particular time.

When the AS curve shifts to the left, it indicates that the economy is producing below its potential and when it shifts to the right, it means that the economy is producing above its potential.

3 0
1 year ago
Other questions:
  • You currently manage Cody’s investment portfolio. He provided you with the following information for the beginning and the end o
    14·1 answer
  • Which one of these statements about the service portfolio is correct?
    11·1 answer
  • How many types of management are there in business?
    7·1 answer
  • Which kind of union involves workers of a particular trade or occupation?
    13·2 answers
  • A brand manager for a certain company must determine how much time to allocate between radio and television advertising during t
    6·1 answer
  • Why do we have to pay for brainly? brainly should be a completely free to help children in need with work they dont understand a
    9·2 answers
  • Out of insurance paid this year 3000 is for next year
    7·1 answer
  • The top management of Wisniewski Automobile Parts Inc. has decided that the company's objective for the next two years will be t
    15·1 answer
  • In March 2012, Yoshiro Inc.. decided to retire an outstanding bond issue before maturity. The coupon rate on the bond issue was
    7·1 answer
  • comparing vendor invoices to inventory prices, obtaining lower of cost or market data and recalculating deprecation schedules re
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!