The answer is Contribution Margin.
What is break-even point?
A transaction or investment's breakeven point (break-even price) is established by comparing the market price of an asset to its initial cost; the breakeven point is reached when the two prices are equal. In business accounting, the breakeven point is calculated by dividing the entire fixed costs of production by the revenue per unit less the variable costs per unit. Those expenses that don't fluctuate regardless of how many units are sold are referred to in this context as fixed costs. The production level at which all sales for a product net the same amount of money as all expenses is known as the breakeven point.
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Answer:
$6000
Explanation:
Economic profit = accounting profit - implicit cost
Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives
accounting profit = 15,000
Implicit cost = 9000
15,000 - 9000 = $6000
Pure competition or perfect competition is where all firms have full knowledge of what is going on in the market, where there is free flow of information between not only the producers, but also with the consumers.
As such, all firms have no dominant share of market power since each individual firm is able to produce the good of the same quality and quantity (factors of production are fluid, and no costs in transportation in this theory). And at the same time, consumers have full knowledge of the quality of good they are getting and hence no firm will be able to exploit the misinformation of a good for its own profits.
This builds up to the point of a perfectly elastic demand curve, where consumers know what amount and at which price point do they value the product at. And knowing for the fact that small individual firms in a purely competitive firm have no say over prices, they become the price takers for this kind of market. Thus where MB=MC, the equilibrium point is reached and it is also at the socially optimal level since all consumers have full knowledge of the pros and cons of consuming a product (hence no externalities).
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Answer:
Consider the following explanation
Explanation:
Context
Game theory involves two players. They have more than one option to decide. Pay off from each options adopted by two players are available. They have to select a strategy which will maximize their own return. But for optimizing their decision, they have to consider the action of his rival.
In this problem, two players are firm A and firm B. They have two strategies low output and high output. The strategies of firm a are measured in rows and for firm B in columns. They have to select a strategy which will maximize their payy off. Each cell has two pay offs. First one is for Firm A and second one is for firm B.
1. Dominant strategy is a strategy which will always give higher payoffs in comparison with pay off of other strategies. Consider first strategy of firm 1. If it adopts strategy of low output, then firm 2 can also adopt either strategy of low output or high output. In that case pay off of firm 1 will be 300 or 200.
Alteratively if firm 1 adopts high output then pay offs are 200 or 75. 200 is earned if firm B also go for low productivity. It is 75 if firm B adopts high productivity.
Now compare two payoffs side by side. Note that firm A has higher pay off in low output [300,200] in comparison with the pay off of high output [200,75]. So whatever strategy firm B adopts, Firm A will always go for low production. So low production strategy of firm A dominates high production strategy.
Same result is not observed for firm B. Pay off from low production strategy of firm B is [ 250,75]. Pay off from high production strategy are [100,100]. Now compare the two. If Firm A go for low production, then firm B will select low production. It will give pay off 250. Similarly when firm A decides for high production, then firm will also decide for high production. It will maximize its pay off. Amount is 100. Thus no strategy dominates for firm B.
Answer:
It will be better to pursue the soap business as it provide a 20,000 economic gain.
Explanation:
currently Natasha wages: $50,000
soap business:
sales revenue 465,000 - cost = 395,000 = 70,000 accounting profit
less 50,000 opportunity cost: 20,000 economic gain
Internet opportunity as it will compete with the local TV company shw currently works, most probably will be fired or quit the job.
3,275,000 revenues - 3,250,000 cost = 25,000 accounting profit
less 50,000 opportunity cost: (25,000) economic loss
It will be better to pursue the soap business as it provide a 20,000 economic gain.
