Question

Jen runs a martial arts club. She now has 50 trainees who pay monthly dues of $200. Every month she pays $1,000 in miscellaneous club- related expenditures including utilities, accounting services, etc. To run the club she quit her day job where she used to earn $7,000/month. She decided to pay herself the same salary for her time spent at the club. She runs the club from the first floor of her house that she inherited from her mother (a famous martial arts teacher herself). There are no payments associated with using that space. Although she could have leased the space to another business for $3,000/month. Using this information answer the following questions: Her monthly economic cost is $ Her monthly accounting cost is $ Her monthly economic profit is $ Her monthly accounting profit is $ Cheal

Answer 1

-Economic Profit - Cost Total Revenue – Explicit + Implicit Cost - Accounting Profit - Total Revenue - Explicit Cost - Economic Cast - Explicit & Implicit Cost - which is Accounting given to Cost is only factors which Explicit Cost are hired. Implicit cost is factor owned the cost of opportunity by owner

solution- Total Revenue = 50x200 = $10,000 7ooot loool - Explicit Cost or Accounting Cost = = 8, Implicit Cost - $ 3000 - Economic Cost - Explicit & Implicit = 2000 + 2000 = 11600 - A Economic profit - TR-Economic = 10000 - 11000 = Cost -loco - Accounting Profit= TR- Explicit Cost. 10000 - 2000 - 2000 =

I VOLTC 1 ML ALL I AVL I ATC

fixed Cost is same for all units so, in fixed Cort blank Golunm column it would be 30. Total fixed Cost & Total Variable Cost Total Cost = At Unit 20 lixed Cost is 30 Variable Cost = 160 Total Cost = 130 Marginal Cost - Change in total Cost Change in Quantity = 210-130 - 80 - 8 30-20 10 - AFC = Total fc al cc = - 30 - 0.6 so 50 Quantity

fixed Cost = - Cost Total Variable = TO- Total 210 - 30 = 180 - Average Variable Cost = Toral ve couantity - 1866 - Average . so Total variable Cost Ave x Quantity At Quantity 50 Total variable cost = 8.4 x 50 = 420 Total Cost = TVCt FC = 420 + 30 = 450 AT TC Quantity