March 30, 2015

Homework Help: Managerial econ 1

Posted by Ed on Tuesday, July 24, 2007 at 9:27pm.

1)The Midnight hour, a local
nightclub, earned $100,000 in
accounting profit last year. This
year the owner, who had invested $ 1
million in the club, decided to
close the club. What can you say
about economic profit (and the rate
of return)in the nightclub business?
Economic Profit = TR(total revenue)-
TC(total economic cost)
EP = $100,000 - $1,000,000
EP = -$900,000

Since EP is a negative number the
firm should shut down, the output is
not positive, therefore the company
operates at a loss, the manager
needs to determine how long they
want to continue with this loss
Does this sound like the correct


Certainly the owner didn't expect to make a million dollars the first year the club was in existence.

If the club continues to increase its revenues, then the owner would be better served for the club to stay in business and increase its profits each year.

Answer this Question

First Name:
School Subject:

Related Questions

managerial economics - The MidNight Hour, LOCl nightclub, earned $100,000 in ...
Managerial Economics - The Midnight hour a local nightclub earned $100,000 in ...
economics - The MidNight Hour, a local nightclub, earned $100,000 in accounting ...
Managerial Economics Question - 1)The Midnight hour, a local nightclub, earned $...
economics - The Midnight Hours, a local nightclub earned 100,000 in accounting ...
accounting - Carlton company had assetsof $280,000 & liabilities of $120,000 at ...
math b50 - must answered in sequences/series formulas If the profit earned by a ...
English - What club are you in? I am in the broadcasting club. the dance club ...
economics - I tried answering b, but stuck with a. Can someone please take a ...
Accounting Math - Can anyone please show me the calculation for these problems: ...