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Integrating Problem Samantha Roberts has a job as a pharmacist earning $ 30,000 per year, and she is deciding whether to take another job as the manager of another pharmacy for $ 40,000 per year or to purchase a pharmacy that generates a revenue of $ 200,000 per year. To purchase the pharmacy, Samantha would have to use her $ 20,000 savings and borrow another $ 80,000 at an interest rate of 10 percent per year. The pharmacy that Samantha is contemplating purchasing has additional expenses of $ 80,000for supplies, $ 40,000 for hired help, $ 10,000 for rent, and $ 5,000 for utilities. Assume that income and business taxes are zero and that the repayment of the principal of the loan does not start before three years. (a) What would be the business and economic profit if Samantha purchased the pharmacy? Should Samantha purchase the pharmacy? (b) Suppose that Samantha expects that another pharmacy will open nearby at the end of three years and that this will drive the economic profit of the pharmacy to zero. What would the revenue of the pharmacy be in three years? (c) What theory of profit would account for profits being earned by the pharmacy during the first three years of operation? ( d) Suppose that Samantha expects to sell the pharmacy at the end of three years for $ 50,000 more than the price she paid for it and that she requires a 15 percent return on her investment. Should she still purchase the pharmacy?
its lenders requested that the firm disclose full information about its revenues and costs. Elucidate why Brownstown's management was reluctant to release this information to its lenders.
what does your anticipated adjustment process imply about the CR for the industry. industry B has 20 firms and the concentration ratio is 85%
When transaction costs are low enough, efficient resource allocation will follow regardless of the particular assignment of property rights. When transaction costs are high enough, efficient resource allocation requires assigning property rights to t..
As we observed in this chapter, central banks, rather than purposefully setting the level of the money supply, usually set a target level for a short-term interest rate by standing ready to lend or borrow whatever money people wish to hold at that in..
newspaper reports frequently suggest that the administration regardless of who is president wants the fed to lower
How much Wyandotte have to decrease the price of polyol to attain a 15% increase in the quantity sold.
q.sara is a dot.com entrepreneur who has established a web site at which people can design and buy a sweatshirt. sara
What additional benefits are possible for people in the private system and why? Which firms in the mutual fund industry might not be approved by the federal government and why?
If each of the firms sets its own output rate to maximize its profits, assuming that the other firm holds its rate of output constant.
Define Indifference Curve and what are the main properties of Indifference Curve? By using Indifference Curve analysis explain how the consumer attains maximum level of satisfaction?
The law in Ruba says no worker shall be paid less than nine slugs per hour.
Which of the following shifts the short-run, but not the long-run, aggregate supply right?
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