In this assignment, you are to prepare a report analyzing the two problems below. Be sure to include your own interpretation and opinion as you prepare this report.
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Jayne spends $30,000 per year on painting supplies and storage space. She recently received two job offers from a famous marketing firm—one offer was for $110,000 per year, and the other was for $80,000. However, she turned both jobs down to continue a painting career. Let’s assume that Jayne sells 25 paintings per year, at a price of $8,000 each. Jayne has asked that you analyze her decision.
- Calculate the accounting profits. Show your math.
- Calculate the economic profits. Show your math.
- Explain the meaning of accounting profits.
- Explain the meaning of economic profits.
- Discuss why it is important for a business manager or owner to understand the distinction between the two forms of profits.
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In a recent speech, the governor of your state announced: “One of the biggest causes of juvenile delinquency in this state is the high rate of unemployment among 16-to-19-year olds. The low wages offered by employers in the state have given fewer teenagers the incentive to find summer employment. Instead of working all summer, the way we used to, today’s teenagers slack off and cause trouble. To address this problem, I propose to raise the state’s minimum wage by $1.50 per hour. This will give teens the proper incentive to go out and find meaningful employment when they are not in school.” The governor has asked you to evaluate his plan.
- Discuss market equilibrium wage rates and the impact on markets when governments intervene by establishing price ceilings or floors.
- Is minimum wage a price ceiling or price floor?
- How might an increase in the state’s minimum wage affect supply and demand?
- Discuss the possible impact on teenage unemployment.
- Evaluate the governor’s plan to raise the minimum wage by $1.50 per hour to reduce juvenile delinquency. Will this plan work?
Prepare a 3-4 page report in APA style that summarizes your findings. If you use outside resources, cite appropriately. Submit your report using the instructions below.
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