Question

1. Jayden is thinking about opening a cupcake store. She expects to sell 1000 cupcakes a month at $4.00 per cupcake. Her anticipated expenses are as follows:

Rent: $1000/ month

Salaries to her employees: $800/ month

Ingredients: $400/ month

Jayden is currently working at Dona Ana Community College and is currently netting (after taxes) $2000/ month.

1. Calculate her anticipated Total Revenue and show work. (2 points)
2. Calculate her Accounting profit and show work. (2 points)
3. Calculate her Economic profit and show work. (2 points)
4. What other expenses did Jayden not anticipate for? (5 points – one point for each expense you include up to 5 points total).
5. Would you advise Jayden to quit her job and open the cupcake store? Why or why not? Please write at least a full short paragraph for full credit. (5 points)

2. Please complete the table (1 point each letter a. – J.)

Q	Variable costs	Fixed costs	Total Costs	Marginal Costs	Average Variable Costs	Average Fixed Costs	Average Total Costs
1	20	400	a.)		b.)	c.)	d.)
2	25	e.)	f.)	g.)	h.)	I.)	J.)

3. List and describe in DETAIL each of the four types of market structures. I am looking for at least four characteristics for each of the four market structures for full credit. (16 points) (4 points each market structure)

4. If you were going to open a business in one of these market structures, which one would you pick and why? (8 points) *hint: I am looking for at least a full paragraph here for full points.
5. What Market Structure is Jayden operating in? (5 points) How would you advise her to diversify her product to maintain longer economic profits? (10 points)
6. (35 points) You will have to use independent research for this question.   Look up Anti trust Law, and decide whether you think that tech companies like Google, Amazon, and Facebook have too much market power and should be broken up? For full credit please cite your sources and write at least three paragraphs with not typos or grammatical errors.

Answer 1

1. Anticipated total revenue = Q*P = 1000*4 = $4000
2. Accounting profit = TR-TAC

Total Accounting cost (TAC) = Rent + Salaries+ Ingredients = $1000+ $800+ $400 = $2200

Accounting profit = $4000-$2200 = $2800

3. Economic profit = TR- TEC

Total economic cost = TAC + Implicit cost (=Opportunity cost of opening the store (= $2000/month drawn as salary by working at Dona Ana Community College)) = $2200+$2000 = $4200

Economic profit = $4000 - $4200 = -$200

A loss of $200.

4. Other expenses:

1. Equipments
2. Marketing strategy
3. Advertisement
4. Inventory
5. Furniture and other supplies

5) The cupcake store business has positive accounting profit but negative economic profit, provided which Jayden must not open cupcake store. Jayden will have to give up his job at the College that pays his $2000 per month. This is a kind of implicit cost for Jaydens cupcake store. Besides the anticipated cost, there are various other unanticipated costs that Jayden has not included which are bound to increase his costs even more. Thus it is beneficial for Jayden to not open up the cupcake store.

Please try to cost questions in a lot of four. Supposed to answer only four parts at a time. Please write if you want further explanation on the answer provided. Thank you.