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1. The sole proprietor of the "Books and More" bookstore receives all accounting profits earned by her firm and a $28,000-a-year salary she pays herself. She has a standing salary offer of $35,000 a year if she agrees to work for a large corporation. If she had invested her capital outside her own company, she estimates that would have returned $22,000 a year. Last year, her accounting profit was $50,000. What was her economic profit?
2. Kendra and Steve run their own business. Every Friday they take two gas grills and grill burgers in front of the Memorial Union. Working from noon till 6pm, they are able to serve 250 hungry customers. They are both equally good in what they are doing, so their wages are equal.
One day Steve was not feeling well, so Kendra had to go there alone. Of course, she has chosen to use only one grill. Within the same period of time she was able to serve 120 customers.
a. What has happened to the average cost of each burger? Show your work.
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Barbara purchased a piece of real estate last year for 85,000. The real estate is now worth 102,000. If Barbara needs to have a total return of 25 percent during the year then what is the dollar amount of income that she needed to have reached her..
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