Question

microeconomics: NOTE : PLEASE BRIEFLY SHOW ME HOW YOU GOT THE RESULT. THANK YOU                             

                                              GOOGLE($)             APPLE($)                       MICROSOFT($)

sales                                       50005                                 5725                                        3050

wages and salaries           29052                                 3932                                         400

cost of capital                           4000                                 1050                                          330

interest on debt                      7585                                   275                                             5

cost of materials                        6500                                   556                                          1650

(NOTE: COST OF CAPITAL > COST OF EQUITY CAPITAL)

3. CALCULATE accounting profit and economic profit for each of the firms.

4. list name of firm(s)which earn(s) more than normal profit.

Answer 1

Accounting profit = Sales - Explicit costs

= sales - wages - capital costs - interest on debt - materials.

Accounting profit...

For google = 50,005 - 29,052 - 4,000 - 7,585 - 6,500

= $2868

Similarly,

For Microsoft = $695

For Apple = -$88

Economic profit = Sales - (Implicit + explicit costs)

As there are no mentioned implicit costs, accounting profit equals economic profits.

4.

Normal profit occurs when the company's total revenu equals the total costs (breakeven) or in simple profit is 0. So from our calculations Google and Microsoft make profits more than normal profit.

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