I.

a. Accounting profit is the revenue minus the explicit costs like utilities and wages of employees, while
economic profit is the total revenue minus the explicit costs and implicit costs also known as
opportunity cost.

b. Accounting profit = TR – (utilities + wages)

= 122,668.66 – (44,511.45 + 30,122.67)

= 48,034.54

Economic profit = TR – EC – IC

=122,668.66 – 44,511.45 – 30122.67 – 55,000

= -6,965.46

c. No, If Kendra will lease her space earning at a guaranteed 55 thousand pesos per month, she will
receive an increase in profit of 6,965.46 every month more than having her own business and paying for
the utilities and salaries of her workers.

d. BEPSV = TFC / USP – UVC

= (15,000 + 5,000) / 400 – 200

= 100 banana cakes

e. BEPSV = TFC / USP – UVC

USP = UVC + (TFC / Q)

= 20,000 + (20,000 / 100)

=20,200

F. Economic profit = TR – EC – IC

= 54,667,141.66 – 23,886,443.54 – 22,166,123.45

= 8,614,574.67

Yes, I would recommend to still continue the business since based from the economic profit calculations,
the company still generates a positive revenue of 8,614,574.67
II.

A.

Gulliver Inc.

Don’t cheat Cheat

ACES Inc. Don’t cheat (120,120) (90,150)

Cheat (150,90) (105,105)

B. Jose should cheat with his competitor as the result of the payoff matrix. As the chances if Jose didn’t
cheat and the competitor cheats, Jose will lose 30 Million pesos. If he cheats he gets an additional 30
Million and the chances of both of them to cheat is high since we can’t give our full trust to our
competitor since at the end of the day, business is business for them and still balancing the profit both
of them can get. Cheating in this situation has the lowest risk for Jose.

C. – D. check Clark’s yawqna

III.

Check Clark’s again

IV.

a. Yes, advertisement and inflation equates to 96% in the movements or changes in the company
sales making them significant.
b. No, the other factors like exchange rates only provide a 4% in the movement or changes of sales
making them insignificant than the advertisement and inflation.
c. No, for the standard error of the model is too high and can result to having data that were too
far from the real.
d. Yes, as the T test result shows that advertisement is above than the value of 2 which is the rule
of thumb for T test and it also shows that the F value is less than 0.05 hence it is passed in the F
test.
e. Yes, as the T test result also shows that it is well above the rule of thumb value of 2 ant it also
shows that it is also succeeded the F test.
f. F t = a+bt

a=x−b t

b=
∑ Xt −n( X )(t )
∑ t 2−n (t¿)2 ¿
n = 20
 2 total sales (demand)
t =2870 X =
no . of years
34767.2341
X=
20
X =1738.361705
210
t=
20
t=10.5
445020.8393−20 (1738.361705)(10.5)
b=
2870−20(10.5)2
79964.88125
b=
665
b=120.2479417
a=x−b t
a=1738.361705−(120.2479417)(10.5)
a=475.7583172
F t =475.7583172+120.2479417(21)

F t = 3000.965093

Mrs. Acosta’s business will continue to grow as forecasted for the next period of 2018

V.

A. Yun na yun.

B. Y=C + I C=Co + bYd Yd= Y – T T = to + tY I = lo

Co = 85 b = 0.75 lo = 30 t = 0.2 To = 20

Y = Co + b[Y – (to + tY)] + lo

Y= 85+ 0.75[Y – (20 + 0.2Y)] + 30

Y = 85 + 0.75[Y – 20 – 0.2Y] +30

Y = 85 + 0.75[Y (1-0.2) – 20] + 30

Y = 85 + 0.75 (Y – 19.2) + 30

Y = 85 + 0.75 Y – 14.4 + 30

Y – 0.75Y = 100.6

Y (1-0.75) = 100.6

Y = 402.4

C. Y = C + I C = Co + bYd Yd = Y – T l = lo

Co = 100 b = 0.6 lo = 40 T = 50

Y = Co + b(Y – T) + lo

Y = 100 + 0.6(Y – 50) + 40

Y = 100 + 0.6Y – 30 + 40

Y – 0.6Y = 110

Y (1 – 0.60) = 110

Y = 275

D.

Δ U =a ¿ )

Δ U =0.15(6.9−4 )

Δ U =0.435 %