Sally Rand owns a ceiling fan company. She sells 1,000 ceiling fans at $50 each. Each fan costs her $20 . She uses her own money to buy the fans; she withdraws the money from her savings account where it earns 5 percent interest. Before going into the ceiling fan business, she worked as a fan-dancer at $25,000 a year. Should Sally remain in business?
If her economic profit is at least zero, Sally should stay in business. Her TR = $50,000 and her total accounting cost is $20,000 . for an accounting profit of $30,000 . She forgoes interest on savings of $20,000 (.05) = $1,000 as well as forgone earnings of $25,000 . This leaves $4,000 in economic profit, so she should stay in business.
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In the above table, for Mary the opportunity cost of producing a dress is ________, and the opportunity cost for Mark of producing a dress is ________
A) 1 1/2 jackets; 2/3 of a jacket B) 1 1/2 jackets; 2 1/2 jackets C) 1 1/4 jackets; 1/2 of a jacket D) 1 jacket; 1 jacket E) 1 dress; 1 dress
At its shutdown point, a perfectly competitive firm earns total revenue that
A) exceeds its total cost. B) generates a normal profit. C) just equals its total variable cost. D) exceeds its total variable cost.
An example of an in-kind transfer is
A) national defense. B) Social Security. C) low-cost public housing. D) unemployment benefits.
Adopt incentive compensation
a. Under all circumstances since it is the best solution b. Only if it is effective in making the agent work harder c. Only if its results exceed its costs d. Only B&C