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Leni [432]
3 years ago
5

Andrew lives in New York City and runs a business that sells boats. In an average year, he receives $793,000 from selling boats.

Of this sales revenue, he must pay the manufacturer, a wholesale cost of $430,000; he also pays wages and utility bills totaling $301,000. He owns his showroom; if he chooses to rent it out, he will receive $15,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also if Andrew does not operate this boat business, he can work as a financial advisor, receive an annual salary of $50,000 with no additional monetary costs, and rent out his showroom a the $15,000 per year rate. No other costs are incurred in running this boat business.
Identify each of Andrew's costs in the following table as either an implicit cost or an explicit cost of selling boats.
Implicit Cost Explicit Cost
The wages and utility bills that Andrew pays
The rental income Andrew could receive if he choose to rent out his showroom
The salary Andrew could earn if he worked as a financial advisor
The wholesale cost for the boats that Andrew pays the manufacturer
Complete the following table by determining Andrew's accounting profit of his boat business.
Profit (Dollars)
Accounting Profit
Economic Profit
Business
1 answer:
melamori03 [73]3 years ago
7 0

Answer:

the solutions are below.

Explanation:

1. The wages and utility bills that Andrew pays is <u>explicit cost</u>

2. The rental income Andrew could receive if he choose to rent out his showroom  <u>is implicit cost</u>

3. The salary Andrew could earn if he worked as a financial advisor s an <u>implicit cost</u>

4. The wholesale cost for the boats that Andrew pays the manufacturer is an <u>explicit cost.</u>

<u></u>

<u>accounting profit = </u>revenue - explicit cost

= 793000-[430000+301000]

=$62000

<u>Economic profit = revenune - [explicit cost + implicit cost]</u>

<u>= </u>793000-[430000+301000+50000+15000]

= 793000-796000

= -$3000

<u></u>

<u></u>

<u></u>

<u></u>

<u></u>

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Answer:

B

Explanation:

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This means that the amount of gasoline gallons bought and quarts of oil has been essentially replaced by the cost of these purchases and hence avail is the power to use money as a unit of account

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Which of the following is a distinct advantage of exporting? A. Absolute control over operations in the foreign nation B. It may
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Answer: B. It may help a firm achieve experience curve and location economies

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3 years ago
Explain whether you agree or disagree with the following statement.
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Answer: AGREE

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A Monopoly faces no competition and are the only sellers of the product they sell. If firms in an industry successfully engage in collusion, the resultant effect will definitely be not unlike a Monopoly because they will set prices as a single firm, control output as a single firm and essentially run the market as a single firm.

They will sell at a rate where the Marginal Revenue curve will be below the demand curve. This will mean a higher price than a competitive market which was probably the main incentive for collusion.

A recent example would be the collusion between BMW, Daimler and Volkswagen, to hinder technological progress in improving the quality of vehicle emissions in order to reduce the cost of production and maximize profits. Thankfully this was busted by the European Commission in 2019.

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