ECO 550 Week 3 Assignment: Jim is considering quitting his job and using his savings to start a small business
- Jim is considering quitting his job and using his savings to start a small business. He expects that his costs will consist of a lease on the building, inventory, and wages for two workers, electricity, and insurance.
a) Indentify which costs are explicit and which are opportunity [implicit] costs.
b) Identify which costs are fixed and which are variable. - Jill resigns from her job, at which she was earning $50,000 per year, and uses her $100,000 savings, on which she was earning 5 percent interest, to start a business. In the first year, she earns revenue of $150,000, and her costs are as follows.
Rent $25,000
Utilities $12,000
Wages $30,000
Materials $20,000
a) Calculate Jill’s accounting profit.
b) Calculate Jill’s economic profit.
Course: ECO 550 Managerial Economics and Globalization
School: Strayer University
- 25/05/2017
- 8