CHAPTER 10 ECON ANSWERS Cecilia is a stockbroker who earned $150,000 in 2011. At the beginning of 2012, Cecilia wanted to pursue a new career so she quit her job and became a personal trainer. In her first year, she made total revenue of $75,000. The information at the right gives details of Cecilia's first year in the personal trainer business. What is Cecilia's economic profit? Cecilia's economic profit is $ −91650. THIS IS THE ANSWER 1. Cecilia leased gym equipment for $5,000 and paid $500 for gym clothes and other supplies. 2. She withdrew $5,000 from her savings account that paid 3 percent a year. 3. Economic depreciation during the year was$1,000. 4. Normal profit is $10,000. Lucinda starts a business consulting company. She makes all the business decisions and bears the risk of running the business. Lucinda expects to receive _______. A. revenue greater than her explicit cost B. revenue greater than the capital investment C. normal profit THIS IS THE ANSWER This is the correct answer. D. revenue greater than her implicit cost Economic profit _______. A. can never be a negative amount B. is equal to total revenue minus the opportunity cost of production THIS IS THE ANSWER This is the correct answer. -91650
C. is equal to the return earned on average by an entrepreneur D. is equal to total revenue minus all of the costs of production that are paid either by cash or cheque Kay's Keyboarding company buys a new computer that Kay uses for word-processing. Kay's opportunity cost of using the new computer is equal to the ______. A. explicit rental rate B. purchase price C. economic depreciation D. implicit rental rate THIS IS THE ANSWER Flora's Flower Shop bought a new van for $35,000. Today, the market price of this van is $20,000. Over the years, Flora's accountant has depreciated the van by $10,000. The economic depreciation of the van is _______. A. $35 comma 00035,000 B. $10 comma 00010,000 C. $20 comma 00020,000 D. $15 000 THIS IS THE ANSWER
Flora's Flower Shop bought a new van for $30 comma 00030,000. Today, the market price of this van is $18 comma 00018,000. Over the years, Flora's accountant has depreciated the van by $10 comma 00010,000. The economic depreciation of the van is _______. A. $12 comma 00012,000 12000 IS THE ANSWER Your answer is correct. B. $10 comma 00010,000 C. $18 comma 00018,000 D. $30 comma 000 Gloria is an executive who earned$50,000 in 2011. But she enjoysphotography, so at the beginning of 2012, she quit her job and became a photographer. The information to the right gives details of Gloria's first year in the photography business. The sum of the cost of resources owned by Gloria's firm and the resources supplied by Gloria is _______. A. $58,200 THIS IS THE ANSWER B. $50,000 C. $58,000 D. $51,000 Question Facts 1. Gloria leased photographic equipment for $25,000 and paid $10,000 for supplies. 2. She borrowed $20,000 at 10 percent a year. 3. She withdrew $5,000 from her savings account that paid 4 percent a year. 4. Economic depreciation was $1,000. 5. Gloria's revenue was $70,000.
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