1. Kumar owns a small seafood restaurant, where he works full-time in the kitche
ID: 1111131 • Letter: 1
Question
1. Kumar owns a small seafood restaurant, where he works full-time in the kitchen. His total revenue last year was $100,000, and his rent was $3,000 per month. He pays his one employee $2,000 per month, and the cost of ingredients and overhead averages $500 per month. Kumar could earn $35,000 per year as the manager of a competing seafood restaurant nearby. His total accounting profit last year was
2.
Accountants consider only explicit costs when measuring accounting profit. The reason they ignore implicit costs is that
3.
Accounting profit ignores which of the following?
4.
In the accompanying table, diminishing marginal product begins after the ________ unit of input.
Input
Total Product
0
0
1
10
2
35
3
70
4
120
5
165
6
175
7
170
8
155
5.
Rebecca owns a fitness gym. If she increases the size of her fitness gym and experiences diseconomies of scale as a result, her long-run average total cost curve should be
6.
Which of the following statements is true?
7.
When firms exit a market, the ________-run market supply curve shifts ________, causing individual firms’ profits to ________.
8.
Holding all else constant, an increase in the price of hot dogs would cause the
9.
Reginald has developed a new social media site that he feels can compete heavily with Facebook. Unfortunately, he cannot find someone to lend him enough money to market his product to consumers. Reginald is facing which kind of barrier to entry?
10.
Which price and quantity combination is undesirable for both the monopolist firm and society?
-$1,000. Price ATC MC MR GH QuantityExplanation / Answer
1. The right answer is option 4. $34,000
Explanation:
Total revenue = $100,000
Total annual rent = 12 * $3,000 = $36,000
Annual wage of employees = 12 * $2,000 = $24,000
Annual overhead charges = 12 * $500 = $6,000
So, total cost = $36,000 + $24,000 + $6,000 = $66,000
So, accountig profit = $100,000 - $66,000 = $34,000
Note: Accounting profit does not take opportunity cost or implicit cost into consideration. So, the potential salary $35,000 as a manager of a competing seafood restaurant will not be considered here.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.