What are the intercepts of budget line

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1. Tanya operates a home business importing sweaters from Peru and sells them from her home. She collects $400,000 in revenue a year, and spends $200,000 on the sweaters and shipping costs, as well as $25,000 on advertising, accounting services and utilities. She takes a salary of $50,000 per year but used to make $100,000 per year working for an advertising agency. Now she works out of the basement of her house, for which she doesn't have any other marketable use. She has no other expenses.

a. Tanya's accounting profit is:

b. Tanya's economic profit is:

2. A household has a monthly income of $100 (this is poor country). A unit of food (10,000 calories) costs $5 (Good X) and a unit of clothing costs $20 (Good Y). What are the intercepts of budget line on the indifference curve graph?

Reference no: EM13183359

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