Economics > QUESTIONS & ANSWERS > University of Louisiana, Lafayette - ECON 528 Module 2 Homework Assignment 2019 (All)

University of Louisiana, Lafayette - ECON 528 Module 2 Homework Assignment 2019

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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 p... ercent 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? Select one: a. $80,000 b. $42,000 c. $70,000 d. $41,500 Accounting costs exclude implicit costs. Select one: a. True b. False 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 a fixed cost of business and the $12,000 he'll need to continue operations is a variable cost. b. The fixed cost of running the studio is $22,000. c. 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. d. The variable cost of running the studio is $22,000 [Show More]

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