Question 1 and question2 QUESTION 1 Jared is deciding whether to open a fruit st

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Question 1 and question2

QUESTION 1 Jared is deciding whether to open a fruit stall at the Sunday markets or just have some free time to relax. He appreciates that this market is perfectly competitive. 1. Jared's free time will be his implicit cost when deciding to enter the market. 2. Thinking like an economist, Jared should open a fruit stall at the Sunday market if he makes an accounting profit that is less thana normal profit. 3. If Jared opens a fruit stall at the Sunday market, he would be a price maker. Which of the above statements are true? Only 1 is true. Only 2 is true. Both 1 and 2 are true. Both 2 and 3 are true. All three are true.

Explanation / Answer

Q1
Option only 1 is true
as her free time is her implicit cost and she should only open when she can make the normal profit or above
and she can not be a price maker because the market is perfectly competitive
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Q2
Option 1, 3

Here the revenue=8000
explicit cost=6000
implicit cost=800
accounting profit=TR-explicit cost
=8000-6000
=2000
Economic profit=accounting profit-implicit cost
=2000-800
=1200
Liam is earning the economic profit so many carpenters earning 800 will attract toward the market to open the new shop
her implicit cost is $800
Liam is earning economic profit

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