Homework #3 – 50 points
1.) Jayden is thinking about opening a cupcake store. She expects to sell 1000 cupcakes a month at $4.00 per cupcake. Her anticipated expenses are as follows:
Rent: $1000/ month
Salaries to her employees: $800/ month
Ingredients: $400/ month
Jayden is cu
ently working at Dona Ana Community College and is cu
ently netting (after taxes) $2000/ month.
a.) Calculate her anticipated Total Revenue and show work. (2 points)
.) Calculate her Accounting profit and show work. (2 points)
c.) Calculate her Economic profit and show work. (2 points)
d.) What other expenses did Jayden not anticipate for? (5 points – one point for each expense you include up to 5 points total).
e.) Would you advise Jayden to quit her job and open the cupcake store? Why or why not? Please write at least a full short paragraph for full credit. (5 points)
2.) Please complete the table (1 point each letter a. – J.)
Q
Variable costs
Fixed costs
Total Costs
Marginal Costs
Average Variable Costs
Average Fixed Costs
Average Total Costs
1
20
400
a.)
b.)
c.)
d.)
2
25
e.)
f.)
g.)
h.)
I.)
J.)
3.) List and describe in DETAIL each of the four types of market structures. I am looking for at least four characteristics for each of the four market structures for full credit. (16 points) (4 points each market structure)
4.) If you were going to open a business in one of these market structures, which one would you pick and why? (8 points) *hint: I am looking for at least a full paragraph here for full points.