chapter 1 class excercise 1.1

chapter 1 class excercise 1.1 - In Class Exercises 1. A...

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In Class Exercises 1. A sunk cost is one that a. changes as the level of output changes in the short run b . was paid in the past and will not change regardless of later decisions c. should determine the rational course of action in the future d . has the most impact on profit-maximizing decisions e. influences rational decision makers
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2. William quits his job where he earns an annual salary of $75,000 and opens a management consulting business, charging an hourly rate of $120. He works out of his home, converting a storeroom into an office. (Zoning restrictions prevent William from renting out the room.) Start-up costs are financed by selling $15,000 worth of bonds he inherited that were warning annual interest payment of $900. During his first year, William incurs expenses for supplies and utilities that total $3,500. If William bills 500 hours of consulting time in the first year, he earns an economic profit equal to a. $55,600 b. -15,000 c. $-19,400 d. $-34,400 e. $41,500 3. Samantha has been working for a law firm and earning an annual
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This note was uploaded on 10/02/2011 for the course MGE 429041 taught by Professor Isseyteh during the Spring '10 term at SUNY Buffalo.

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chapter 1 class excercise 1.1 - In Class Exercises 1. A...

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