1. An entrepreneur is thinking of starting a firm. The firm will pay Tk. 320,000 in wages/salary,...
Question:
1. An entrepreneur is thinking of starting a firm. The firm will pay Tk. 320,000 in wages/salary, Tk. 150,000 on raw materials, Tk. 100,000 for rent per month. If the entrepreneur worked as a manager for somebody else, he would earn Tk. 50,000 per month. The firm’s total revenue per month is Tk. 600,000.
a) Calculate the accounting profit of this firm.
b) Do you think the entrepreneur should start this firm, explain your answer.
2. List the characteristics of the four different types of market structures discussed and give an example of each.
3. Suppose you start a business manufacturing computer software. Assume that this computer software company is a perfectly competitive firm. Your fixed cost per month is Tk. 60,000 and the total cost is Tk. 140,000. If you sell 1000 software per month and the average revenue is Tk. 90, what should be your short-run decision regarding shutdown and long-run decision regarding exit?