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Chapter One
Technical Problem 2
a) Implicit Costs: Opportunity cost = $500,000 x 14% = $70,000
Explicit Costs: What is paid for products/services = $80,000
Total Economic Costs: Implicit Costs + Explicit Costs = $70,000 + $80,000 = $150,000
b) Economic Profit: Total Revenues – Total Economic Cost = $175,000 - $150,000 = $25,000
c) Accounting Profit: Total Revenues – Explicit Costs = $175,000 - $80,000 = $95,000
d) New Implicit Costs = $500,000 x 20% = $100,000
Economic Profit: $175,000 – ($100,000 + $80,000) = $ (5,000)

Chapter Two
Technical Problem 1

Qd = 600 – 4PA – 0.03M – 12PB + 15F + 6Pe + 1.5N

a) The intercept parameter: The amount of the good consumers would demand if the price was zero = 600 units
b) The slope parameter for the price of good A: - 4.
This is the correct algebraic sign because for every $1 increase in price, quantity demanded will decrease by 4 units. Price and quantity demanded are inversely related; therefore, this is the......

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Approximate Word Count: 590
Approximate Pages: 3 (250 words per double-spaced page)

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