Suppose a local hardware store has explicit costs of $1 million per year and imp

Question

Suppose a local hardware store has explicit costs of $1 million per year and implicit costs of $45,000 per year. If the store earned an economic profit of $35,000 last year, this means that the store's accounting profit equaled: A) $94,000 B) $80,000 C) $1.08 million D) $1 million 1. For the Colorado beef industry to be classified as perfectly competitive, ranchers in Colorado must have ___ on prices and beef must be a A) no noticeable effect; standardized B) a huge effect; standardized C) a huge effect; differentiated D) no noticeable effect; differentiated 2. product. For the fast food restaurant industry to engage in monopolistic competition, there must be restaurant(s) and the restaurant offerings must be A) few; standardized B) many; standardized C) one; differentiated D) many; differentiated 3. Economics deals primarily with the concept of A) money B) banking C) scarcity D) consumption 4. Callie makes 20 wedding cakes per day. The marginal cost of the 20th cake is $24, and the average total cost of 20 cakes is $5. The average total cost of the 19 cakes is: A) $6 B) $5 C) $4 D) $8 5.

Explanation / Answer

1. B) $80,000

Explanation: Economic Profit = Accounting Profit - Implict Cost

So, $35,000 = Accounting Profit - $45,000

So, Accounting profit = $45,000 + $35,000 = $80,000.

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