5- Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5,000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $4,000 per year if alternatively invested. He has been offered $15,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $3,000 per year. Total annual revenue from pottery sales is $72,000. Calculate the accounting profit and the economic profit for Gomez's pottery firm.
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- H6. Your mother owns and runs an arts and craft store, and the business is doing well. She would have otherwise been employed as a high school geography teacher making $80,000 a year or as an interior decorator making $68,000 a year. She owns the building in which her shop is located, which she could have rented out for $24,000 a year. Her annual revenue from the shop is $430,000 and she employs four workers, each of whom earns $30,000 a year. On average, she spends $206,000 per year traveling, purchasing, and shipping unique merchandise for resale at her store. Based on this information, do you think you should encourage her to return to teaching? Explain your advice with the help of calculations on her opportunity costs, accounting profit, and economic profit.Mr. Afzal runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $4000 per year ifalternatively invested. He has been offered $15,000 per year to work as a potter for a competitor.He estimates his entrepreneurial talents are worth $3000 per year. Total annual revenue from pottery sales is $72,000. Calculate the accounting profit and the economic profit for Afzal’spottery firm.Definition of economic costs Hubert lives in Houston and runs a business that sells guitars. In an average year, he receives $722,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $422,000; he also pays wages and utility bills totaling $268,000. He owns his showroom; if he chooses to rent it out, he will receive $1,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Hubert does not operate this guitar business, he can work as an accountant, receive an annual salary of $42,000 with no additional monetary costs, and rent out his showroom at the $1,000 per year rate. No other costs are incurred in running this guitar business. Identify each of Hubert’s costs in the following table as either an implicit cost or an explicit cost of selling guitars. Implicit Cost Explicit Cost The rental income Hubert could receive if he chose to rent out his showroom The…
- Zubair purchases material by Rs. 20,000 per year and pays R. 10,000 for storage space. He recently received two job offers from a famous marketing firm—one offer was for Rs. 250,000 per year, and the other was for Rs. 190,000. However, he turned both jobs down to continue his business. If he sells 50 units of his product per year at a price of Rs. 10,000 each: a. What are her accounting profits? b. What are her economic profits?1. Costs and profit Raphael lives in New York City and runs a business that sells pianos. In an average year, he receives $851,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $476,000; he also pays wages and utility bills totaling $281,000. He owns his showroom; if he chooses to rent it out, he will receive $71,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Raphael does not operate this piano business, he can work as an accountant and receive an annual salary of $34,000 with no additional monetary costs. No other costs are incurred in running this piano business. Identify each of Raphael's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit Cost Explicit Cost The wages and utility bills that Raphael pays The wholesale cost for the pianos that Raphael pays the manufacturer The rental income Raphael could receive if he chose to…Definition of economic costs Manuel lives in Chicago and operates a small company selling drones. On average, he receives $702,000 per year from selling drones. Out of this revenue from sales, he must pay the manufacturer a wholesale cost of $402,000. He also pays several utility companies, as well as his employees wages otaling $279,000. He owns the building that houses his storefront; if he choose to rent it out, he would receive a yearly amount of $8,000 in rent. Assume there is no depreciation in the value of his property over the year. Further, if Manuel does not operate the drone business, he can work as a programmer and earn a yearly salary of $20,000 with no additional monetary costs, and rent out his storefront at the $8,000 per year rate. There are no other costs faced by Manuel in running this drone company. Identify each of Manuel's costs in the following table as either an implicit cost or an explicit cost of selling drones. Implicit Cost Explicit Cost O The wages that…
- 14. Lorenzo lives in New York City and runs a business that sells guitars. In an average year, he receives $851,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $476,000; he also pays wages and utility bills totaling $281,000. He owns his showroom; if he chooses to rent it out, he will receive $71,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Lorenzo does not operate this guitar business, he can work as an accountant and receive an annual salary of $34,000 with no additional monetary costs. No other costs are incurred in running this guitar business. a. Which costs are considered explicit? Which costs are considered implicit? b. What is Lorenzo's total cost? C. What is Lorenzo's total revenue? d. What is Lorenzo's accounting profit? e. What is Lorenzo's economic profit? f. Is Lorenzo earning a normal profit? If his goal is to maximize economic profit, should Lorenzo quit the…Eduardo, a teacher, earned $40,000 as his annual salary from his employer in 2018. But in 2019 he decided to quit that job and start his own business: manufacturing skateboards. Here's what he did to accomplish it: Stopped renting out his grandparents' cottage (for $8,000 a year) and used it as his factory instead. .He spent $60,000 on materials and utility bills. He got that money from his savings account, which was earning 5% annual interest. • He leased machines for $10,000 a year and paid $15,000 in wages. He sold $135,000 worth of skateboards. Eduardo's accounting profit is but his economic profit is O160,000; 85,000 141,000; 160,000 O-1000; 50,000 50,000; -1000Table Cost.EX2: Costs and Outputs for a Competitive Firm Total Total Output Fixed Variable (Q) Costs Costs $30.00 $0.00 1 $30.00 $70.00 $30.00 $120.00 $30.00 $150.00 $30.00 $220.00 $30.00 $300.00 Refer to Table Cost.EX2. When production is 3 units, the firm's average total cost is about $62.50 O No answer text provided. $60.00 O No answer text provided.
- 2.6 Isabel runs her family's small pineapple processing plant, which takes fresh pineapples and cuts them into pine- apple rings, spears, and chunks. The capital stock of the firm consists of three machines of various vintages, each of which can the pineapples into any of the three different forms. All of the machines are in excellent condi- process tion, and all machines can be running at the same time. Cost of Processing per Pineapple Maximum Total Capacity (Pineapples) per Day Machine 1 $ 0.10 250 Machine 2 0.25 400 Machine 3 0.50 500 a. Assume that “cost of processing" includes all labor and materials, including the owner's wages. Assume further that Isabel's family signed a long-term contract (20 years) with a service company to keep the machines in good repair for a fixed fee of $1,825 per year, or $5 per day. (1) Derive the firm's marginal cost curve. (2) Derive the firm's total cost curve. b. At a price of $0.40, how many pineapples would the company process? What would total…Gomez runs a small pottery fem. He hares one helper at $14,500 per year pays annual rent of $7.500 for his shop, and spends $18,000 per year on materials. He has $40,000 of his own funds invested in equipment pottery wheels, kdns, and so forth) that could eam han $5.000 per year if aftermatively invested. He has been offered $23.000 per year to work as a potter for a competitor He estimates he entrepreneurad talents are worth $6,000 per year. Total annual revenue from pottery sales is $86,000 Instructions: Enter your answers as whole numbers a Calculate the accounting profit for Gomez's pottery firm b Now calculate Gomer's economic profitDefinition of economic costs Hubert lives in Detroit and runs a business that sells boats. In an average year, he receives $728,000 from selling boats. Of this sales revenue, he must pay the manufacturer a wholesale cost of $428,000; he also pays wages and utility bills totaling $262,000. He owns his showroom; if he chooses to rent it out, he will receive $18,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Hubert does not operate this boat business, he can work as a paralegal, receive an annual salary of $21,000 with no additional monetary costs, and rent out his showroom at the $18,000 per year rate. No other costs are incurred in running this boat business. Identify each of Hubert’s costs in the following table as either an implicit cost or an explicit cost of selling boats. Implicit Cost Explicit Cost The wholesale cost for the boats that Hubert pays the manufacturer The wages and utility…