Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 15, Problem 3DQ
To determine
The effect corporate profit taxes have on an investment.
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Jaynet spends $30,000 per year on painting supplies and storage space. She recently received two job offers from a famous marketing firm—one offer was for $110,000 per year and the other was for $80,000. However, she turned both jobs down to continue a painting career. If Jaynet sells 25 paintings per year at a price of $8,000 each
What are her accounting profits?
What are her economic profits?
Suppose the total benefit derived from a continuous decision, Q, is B(Q) = 20Q − 2Q2and the corresponding total cost is C(Q) = 4 + 2Q2, so that MB(Q) = 20 − 4Q and MC(Q) = 4Q.
What is total benefit when Q = 2? Q = 10?
What is marginal benefit when Q = 2? Q = 10?
What level of Q maximizes total benefit?
What is total cost when Q = 2? Q = 10?
What is marginal cost when Q = 2? Q = 10?
What level of Q minimizes total cost?"
Consider a new business that invests $20
million into a plant to manufacture loaves of
bread. The market for bread is say around 100
million loaves and the new firm expects that it
will be able to obtain a market share of
around 5%. At that level of production, the
total cost of production is $10 million. Let us
say that it targets a 20% return on its
investment. What should the price of a loaf of
bread be? Use the principle of target rate of
return pricing. If the mark-up rate is 10% what
will the full-cost price be?
Mike spends RM35,000 per annum on painting supplies and storage space. He recently received two job offers from a famous marketing firm – one offer was for RM 95,000 per year, and the other was for RM 105,000. However, he turned both jobs down to continue a painting career. If Mike sells 20 paintings per year at a price of RM 8,000 each:
Question 1: What are his accounting profits?
Question 2: What are his economic profits?
Chapter 15 Solutions
Economics (Irwin Economics)
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