Bus 640 Week 1

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Week 1 Assignment Ashford University BUS 640: Managerial Economics Instructor: Marlo Chavarria September 10, 2012 Chapter 1: Applied Problem 1 A) Explicit Cost Total operating costs and expenses $555,000 Interest expenses $45,000 Income taxes $28,000 Net Income $165,000 Total Explicit Costs for 2010 $793,000 Implicit Costs Annual Salary $175,000 15% interest on a $100,000 investment $15,000 Total Implicit Costs for 2010 $190,000 Economic Costs Total Explicit Costs $793,000 Total Implicit Costs $190,000 Total Economic Costs for 2010 $983,000 B) Accounting Profit Revenue $970,000 Operating costs and expenses -$555,000 Interest Expenses -$45,000 Income Taxes -$28,000 Net Income -$165,000 Total Accounting Profit for 2010 $177,000 C) D) Chapter 2: Applied Problems 2 A) In knowing that Florida faces a major freeze in which the price of oranges and quantity of produce will fall below. B) In knowing that new technological development has occurred in which the amount of oranges will increase and the cost of oranges will decrease. If the suppliers can reduce or cut back their supply then it would lead to more sales and increase in supply. So therefore if technology is not made for everyone meaning all suppliers then this could affect these suppliers in their financial and could even lead them to lose their business. C) If the AMA announces that drinking orange juice can reduce the risk of heart attacks then this could cause a huge increase in demands and could also lead an increase in price or price could stay neutral temporarily but the supply would decrease the price later on the line. D) Knowing that the price of grape fruit falls then it means there has not been a high demand for the grape fruit. So therefore lowering the
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