ECO 550 Week 3 Assignment: Jim is considering quitting his job and using his savings to start a small business

ECO 550 Week 3 Assignment: Jim is considering quitting his job and using his savings to start a small business

  1. 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.
  2. 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