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Joanne quit her job at Umass where she earned $29,000 a year. She cashed in $40,000 in corporate bonds that earned 10% interest annually to buy a stretch Hummer. Joanne has decided to buy the Hummer and set up a commuter service between Boston and Lowell. There are 1000 people who will pay $400 a year for the commuter service; $280 from each person goes for gas, maintenance, insurance, depreciation etc.

Write your answers to the following questions on the answer sheet.

A. What are Joanne's total revenues?

B. What are Joanne's explicit costs?

C. What is her accounting profit?

D. List 2 important implicit costs that Joanne has not included.

E. What is Joanne's pure economic profit (loss)?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9465487

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