ECON 528 HOMEWORK 2

1 Question 1 Correct Marked out of 1.00 Flag Question 2 Correct Marked out of 1.00 Flag Question 3 Correct Marked out of 1.00 Flag b. False a. True Question text Accounting costs exclude implicit costs. Select one: Question text Adam spent $10,000 on new equipment for his small business, "Adam's Fitness Studio." Membership at his fitness center is very low and at this rate, Adam needs an additional $12,000 per year to keep his studio open. Which of the following is true? Select one: a. The $10,000 Adam spent on equipment is the total cost of starting the business and the $12,000 he'll need to continue operations is a marginal cost. b. The fixed cost of running the studio is $22 000. ECON 528 HOMEWORK 2 d. $41,500 Select one: a. $80,000 b. $42,000 c. $70,000 Question text Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 on equipment and hairdressing material. Based on this information, what is the amount of her implicit costs? 2 Question 4 Correct Marked out of 1.00 Flag question d. The $10,000 Adam spent on equipment is a fixed cost of business and the $12,000 he'll need to continue operations is a variable cost. a. $o1n,1e5: 7 Select Table 11-7 shows cost data for Lotus Lanterns, a producer of whimsical night lights. Refer to Table 11-7. What is the variable cost of production when the firm produces 115 lanterns? ECON 528 HOMEWORK 2 Quantity of Fixed Cost Variable Cost Total Cost Average Total Cost Lanterns (dollars) (dollars) (dollars) (dollars) .93 .36 90 200 7.67 .8 .5 Quantity of Lanterns Fixed Cost (dollars) Variable Cost (dollars) Total Cost (dollars) Average Total Cost (dollars) .93 Question text Table 11-7 Question text Table 11-7 Question 5 Correct Marked out of 1.00 Flag question b. $1,556 c. $956 d. $10.05