b. The following are costs and revenues incurred by an ice cream company in short-run production. Fixed cost (month) : RM Rent 5 000 Interest on loan 1 200 Premium insurance 600 Variable cost (month) : Wages Maintenance 8 800 300 Utilities 2 200 Raw material 9 600 Transportation Owners salary before start producing own ice cream firm 2 000 54 000 Revenue (month): Price per one cone ice cream Operation days Average customer per day RM5 26 days 250 customers Based on the above information, calculate: i. Total revenue ii. Total cost iii. Economic profit From the answer to question (iii), what can you advise the ice cream maker?

b. The following are costs and revenues incurred by an ice cream company in short-run production. Fixed cost (month) : RM Rent 5 000 Interest on loan 1 200 Premium insurance 600 Variable cost (month) : Wages Maintenance 8 800 300 Utilities 2 200 Raw material 9 600 Transportation Owners salary before start producing own ice cream firm 2 000 54 000 Revenue (month): Price per one cone ice cream Operation days Average customer per day RM5 26 days 250 customers Based on the above information, calculate: i. Total revenue ii. Total cost iii. Economic profit From the answer to question (iii), what can you advise the ice cream maker?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are in the train station waiting for your train to arrive. You see a vending machine from where youcan buy snacks and chips for $3.50. Posted on the machine is a sign saying: “Property of XYZVendsolutions Pty Ltd”. You insert the coins required into the machine and out comes a packet ofchips. However, when you open the packet of chips, you find bits of plastic inside and you don’t wantto eat the chips. You want your money back. With reference to the essential elements for the formation of a contract, explain:a) Did you enter into a contract in this scenario?words)b) If your answer is yes, with whom did you enter a contract?
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The table below provides the total revenues and costs for a small landscaping company in a recent year. Total Revenues ($) 250 000 Total Costs ($) wages and salaries 150 000 - risk-free return of 2% on owner's capital of $20 000 400 - interest on bank loan 1500 cost of supplies 27 000 depreciation of capital equipment 8000 - additional wages the owner could have earned in next best alternative 30-000 800 - risk premium of 4% on owner's capital of $20 000 a. Refer to Table calculate explicit costs for this firm? b. Refer to Table calculate implicit costs for this firm? C. Refer to Table, what is the accounting profits for this firm are? d. Refer to Table, calculate he economic profits for this firm?
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Trombly Fabrication has three production facilities located in the state, each producing the same basic mix of products. Facility 1 was the original plant and the only one for several years. Facilities 2 and 3 were added recently to handle the increased volume. Data for the three facilities on output and the three primary inputs for the most recent period follow: Value of product produced Materials cost Labor cost Overhead Facility Facility 1 Facility 2 Facility 3 Facility 1 $ 545,698 223,000 92,820 100,980 Required: a. Compute the total factor productivity for the three production facilities. Note: Round your answers to 2 decimal places. Total Factor Productivity Facility 2 $ 283,108 138,400 40, 100 81,900 Facility 3 $ 242,432 123,700 36,200 71,900
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Tennis Products, Inc., produces three models of high-quality tennis rackets. The following table contains recent information on the sales, costs, and profitability of the three models: MODEL AVERAGEQUANTITYSOLD (UNITS/MONTH) CURRENTPRICE TOTALREVENUE VARIABLECOST PERUNIT CONTRIBUTIONMARGIN PERUNIT CONTRIBUTIONMARGIN* A B C Total 15,000 5,000 10,000 $30 35 45 $450,000 175,000 450,000 $1,075,000 $15.00 18.00 20.00 $15 17 25 $225,000 85,000 250,000 $560,000 *Contribution to fixed costs and profits.The company is considering lowering the price of Model A to $27 in an effort to increase the number of units sold. Based on the results of price changes that have been instituted in the past, Tennis Products’ chief economist estimates the arc price elasticity of demand to be –2.5. Furthermore, she estimates the arc cross elasticity of demand between Model A and Model B to be approximately 0.5 and between Model A and Model C to be approximately 0.2. Variable costs…
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