The sole proprietor of the Alton Plumbing Supply Company receives all accounting profits earned by his firm and a $30,000 a year salary. He has a standing salary offer of $40,000 a year working for a large corporation. If he had invested his capital outside his company, he estimates that would have returned $15,000 this year. If accounting profits for the year were $65,000, economic profits were:
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The sole proprietor of the Alton Plumbing Supply Company receives all accounting profits earned by his firm and a $30,000 a year salary. He has a standing salary offer of $40,000 a year working for a large corporation. If he had invested his capital outside his company, he estimates that would have returned $15,000 this year. If accounting profits for the year were $65,000, economic profits were:
Revenue less explicit costs minus opportunity cost equals economic profit. All costs that are normally accounted for, such as labour costs, material costs, marketing expenses, depreciation, and taxes, are considered explicit costs.
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- ABC,Inc., is a leading manufacturer to tufted carpeting under the Ironside brand. During the past year, Ironside sold 16 million square yards (units) of carpeting at average wholesale price of Rs.8.75 per unit. This year, disposable income per capita is expected to surge from Rs.26670 to Rs.29000 in a booming economic recovery. Without any price change, Ironsides marketing director expects current-year sales to rise to 25 million units. In an effort to reduce excess end-of-the-model-year inventory, ABC,Inc. offered a 3.5% discount off the average price of tufted carpeting under the Ironside brand sold during the month of August. Customer response was enthusiastic, with unit sales rising by 12% over the previous months level in result of the price decrease.Calculate the income arc elasticity of demand.ABC,Inc., is a leading manufacturer to tufted carpeting under the Ironside brand. During the past year, Ironside sold 16 million square yards (units) of carpeting at average wholesale price of Rs.8.75 per unit. This year, disposable income per capita is expected to surge from Rs.26670 to Rs.29000 in a booming economic recovery. Without any price change, Ironsides marketing director expects current-year sales to rise to 25 million units. In an effort to reduce excess end-of-the-model-year inventory, ABC,Inc. offered a 3.5% discount off the average price of tufted carpeting under the Ironside brand sold during the month of August. Customer response was enthusiastic, with unit sales rising by 12% over the previous months level in result of the price decrease.Calculate the income arc elasticity of demand. Calculate the point price elasticity of demand for tufted carpeting. (Hint: Use ΔQ=12%)ABC,Inc., is a leading manufacturer to tufted carpeting under the Ironside brand. During the past year, Ironside sold 16 million square yards (units) of carpeting at average wholesale price of Rs.8.75 per unit. This year, disposable income per capita is expected to surge from Rs.26670 to Rs.29000 in a booming economic recovery. Without any price change, Ironsides marketing director expects current-year sales to rise to 25 million units. In an effort to reduce excess end-of-the-model-year inventory, ABC,Inc. offered a 3.5% discount off the average price of tufted carpeting under the Ironside brand sold during the month of August. Customer response was enthusiastic, with unit sales rising by 12% over the previous months level in result of the price decrease.Calculate the point price elasticity of demand.
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