ECON 528 / ECON528 HOMEWORK 2, QUESTIONS AND ANSWERS.Question 1
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Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldil
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ECON 528 / ECON528 HOMEWORK 2, QUESTIONS AND ANSWERS.Question 1
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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 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?
Select one:
a. $80,000
b. $42,000
c. $70,000
d. $41,500
Question 2
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Accounting costs exclude implicit costs.
Select one:
a. True
b. False
Question 3
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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.
c. The variable cost of running the studio is $22,000.
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.
Question 4
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