Answer to Question #66571 in Other Economics for Nisha
If Jamie decides to embark on her new venture, what will her accounting cost be during the first year of operation? Her implicit costs? Her opportunity cost?
Suppose that Jamie’s estimated selling price is lower than originally projected during the first year. How much revenue would she need in order to earn positive accounting profits? positive economic profit?
If Jamie decides to embark on her new venture, then her accounting cost during the first year of operation is:
AC = $145,000.
Her implicit costs are $75,000.
Her opportunity cost is also $75,000, as this sum she could earn on her previous position.
If Jamie’s estimated selling price is lower than originally projected during the first year, then she need the revenue of more than $145,000 in order to earn positive accounting profits and more than $145,000 + $75,000 = $220,000 to earn positive economic profit.
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