Ch. 9 homework questions: Microeconomics

Patrick has chosen to double-major in finance and microbiology and studies 14 hours a day as a result. To make it through his studies. Patrick relies on GreenCow energy drinks. Below is a chart of his marginal costs (MC) and marginal benefits (MB) from consuming GreenCow. What is the optimal quantity of GreenCow drinks for patrick? What occurs if Patrick consumes more than the optimal quantity?

5 can obviously The extra benefits Patrick gets from another can are no longer worth the cost. If Patrick were to consume any more than 5 cans of GreenCow, the cost of each additional can would be higher than the additional benefit (because the marginal cost curve is higher than the marginal benefit curve). Consuming any cans beyond the 5th therefore makes him worse off. It cannot be determined if the other answer choices are true based on the information provided here.

Albert owns a breakfast diner and decides to add a new item to his menu, the Peerless Omelet. Albert must decide how many eggs to include in each omelet so that he makes the highest profit. Please use the information in the chart below to answer the questions that follow. How many eggs should Albert include in the omelet? What kind of marginal cost does Albert have?

6 constant The marginal cost for each additional egg is $0.45, meaning that it costs this much for Albert to add one more egg. As he adds eggs, he also increased the price he charges for the omelet. The change in price from one size to another gives him his marginal benefit. Any rational producer would stop producing at the point where marginal cost exceeds marginal benefit, and for Albert, this point would be 6 eggs. If he produces omelets with 3, 4, or 5 eggs he would be missing out on profit he could earn by including more. Also, if he produced omelets with 7 or 8 eggs, he would face the situation of being able to increase his profit by reducing the number of eggs included and dropping his price. Six eggs in each omelet is his profit-maximizing point.

what is the primary difference between accounting profit and economic profit? Russ owns a fried chicken stand that operates at the local beach. In calculating how much he earns from his business, Russ notices a difference between his economic and accounting profits. Why would Russ' economic profit differ from his accounting profit?

Accounting profits IGNORE implicit costs (CASH); economic profits consider them (CASH AND NON-CASH). He may have implicit costs associated with operating the chicken stand in addition to explicit costs.

On your way home from Super Groceries your car breaks down. It is a hot summer day and you have nobody to call. With little time before the food soils, you decide to prioritize what to carry on the walk home. You choose to take three items with you. Since you will need all five items toady, you will replace the two abandoned items at the corner store near your house, Convenient Grocers.

BEEF, EGGS, VEGETABLES The important concept to remember here is that of sunk costs. In this case, the price that you paid for the items at the Super Groceries is a cost that you cannot recover. The only price that matters is the price it will cost you to replace the items. So you should ignore Super Groceries\' prices and save the three items with the highest price at Convenient Grocers, which are beef, eggs, and fruits. This means you only need to replace milk and vegetables at a cost of $2.75 and $2.95. Note that if you had saved beef, milk, and vegetables, which had cost you the most, you would have to replace eggs and fruits at a cost of $4.75 and $3.60.

Jackson manages his father's fruit stand. He takes an accounting of all the company's assets, including equipment, tools, financial assets and inventory. These items are examples of: Abe owns a candy shop and at year end calculates his revenue minus his explicit cost. the result is an example of: Hailey decides to buy a pretzel from the cart outside her office. She pays 3.25 in cash for her lunch. The 3.25 is an example of : Annabelle runs a tutoring company. In determining her costs and benefits from the venture, she includes her opportunity costs from choosing to open the tutoring business. She is evaluating the firm's Sacha leaves his job as a nuclear engineer to become a train conductor. One day, while riding the rails, he considers the salary he could have earned had he remained an engineer. This is an example of: Ginny works for an investment firm an after reviewing the investment decisions her firm made last year, consider other ways the funding could have used. She is considering her:

CAPITAL ACCOUNTING PROFIT EXPLICIT COST ~ SUNK COST ECONOMIC PROFIT IMPLICIT COST IMPLICIT COST OF CAPITAL.

Angus works as a dairy farmer and loves his work. Because the dairy business hasn't been doing well lately, Angus is considering changing careers. He could work as a technician at the local diary plant, and earn $27,000 a year. Angus decides to make a list of the costs of staying in business as a farmer and asks you for help. Please sort Angus' costs below according to whether they are explicit costs or implicit costs.

EXPLICIT COSTS: the wage he PAYS to his hired hand the feed he BUYS for his cows the gas he USES for his farm truck the COST OF VETERINARY CARE for his cows IMPLICIT COSTS: the TIME it takes him to milk all of his cows The 27000 annual salary he would receive from working at the dairy plant.

The cost of producing one more unit of a good or service: The situation where an additional unit of a good or service costs the same as each of the former units: CONSTANT MARGINAL COST The benefit experienced from undertaking one more unit of an activity: a situation where the expense of producing one more unit of a good or service is greater than that of producing the previous unit: the amount that, when produced or consumed, results in the greatest possible net gain. The situation that occurs when the gain from an additional unit of a good or service is less than that gained from producing the previous unit.

MARGINAL COST MARGINAL BENEFIT. INCREASING MARGINAL COST OPTIMAL QUANTITY DECREASING MARGINAL BENEFIT.

reggie owns and operates a cheese shop in the village of somerset. While Reggie has a degree in mechanical engineering and could easily go to work for his brother's company earning 76000 a year, his true passion is or cheese. Below is a list of Reggie's expenses from 2010, please use information provided to answer the questions that follow.

What is Reggie's accounting profit? REVENUE - EXPENSES AND DEPRECIATION 90000-18000-6000-3000=63000 What is Reggie's economic profit? REVENUE - EXPENSES AND DEPRECIATION - IMPLICIT COSTS 90000-18000-60000-3000-76000 = -13000

Either-or/how much after graduation from law school, frank is offered one job in chicago and another in new york. where should frank work? bella is accepted to four graduate school programs. where should she go to school?

either-or decisions

Either-or/how much jake needs to stay awake while he studies for his midterm tomorrow. what quantity of coffee should jake drink? marvin arrives at his favorite buffet to eat chinese food, sometimes, he overeats and leaves the buffet with a stomach ache

how much decisions