Economics of Enterprise Answers

Identify the main components and features of various systems of agriculture

Dewey is considering starting his own business as a photographer. Dewey is currently a tax attorney, making $150,000 per year and working 60 hours per week. Dewey estimates that it will take 6 hours to service each studio client and 18 hours for each bridal client He is limiting his work hours to the 60 hours he previously worked each week. He charges $500 per studio client and $5000 per bridal client. He spent $5,000 of his savings that had been earning 4% interest in order to purchase his camera and lighting equipment. He borrowed $10,000 from the bank to convert two rooms in his home to an office and studio space. He would also like you to determine what his annual revenue will be in addition to calculating the following:

1. What is Dewey's accounting profit?
2. Suppose Dewey could have used his talents to run a similar kind of business instead. If he values his entrepreneurial skill at $10,000 annually, find Dewey's total implicit costs.
3. What was Dewey's economic profit last year?

it has always been free to enter the Botanical Gardens in San Francisco golden gate park. but last year the parks department initiated a 7$ entry fee for non residents. they expected to earn 650,000$ in annual revenue. instead, revenue will actually be no more than 400,000$. so now they are considering lowering the entrance fee. if the goal is to maximize revenue, should the parks department lower the entrance fee or should they engage an advertising agency to promote the park ? explain your choice be sure to include the law of demand and elasticity in your answer

A large wood products company is negotiating a contract to sell plywood overseas. The fixed cost that can be allocated to the production of plywood is $800,000 per month. The variable cost per thousand board feet is $155.50. The price charged will be determined by p = $600 − (0.05)D per 1,000 board feet.
For this situation, determine the optimal monthly sales volume for this product and calculate the profit (or loss) at the optimal volume.

a cereal company wants to know how much influence small children have on cereal choices . as a marketing research expert advice management on what marketing research is and explain the marketing research process you will go through to conduct the research for the organization

the difference between short-run and long-run period of production in economics

If all cost are equal, what 5 things should you measure to make a good decision between trade-offs?

1. The two demand curves in Figure 5-7 in the textbook (p. 123) are linear demands parallel to each other.

a. Show that the demand curve for 1986 in Figure 5-7 is more elastic at every price than the demand curve in 1971. (2)
In figure 5-1 the elasticity at point 1 along the 1986 demand curve is A/B and the elasticity at point 2 on the 1971 demand curve is A/Bp. Since in both figures the distance A is the same, the 1986 demand curve is more elastic.


b. Show that the demand curve for 1986 in Figure 5-7 is less elastic at every quantity than the demand curve in 1971

1. How should you allocate your $10 between wings and sandwiches so as to achieve maximum utility?

2. Verify that the marginal utility per dollar of each good is the same at the utility maximizing bundle.

3. Suppose the price of sandwiches falls to $2. By comparing the marginal utility per dollar of your current purchases of wings and sandwiches, should you purchase more sandwiches, more wings, or does your current bundle still maximize your utility?

4. Assuming you still allocate $10 between the two goods, what amounts of wings and sandwiches maximize your utility at these new prices?

5. From the exercises above, list two price/quantity combinations that lie on your demand curve for wings.

Consumer income and the prices of substitute and complementary products are factors that can affect the