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ECON802 - The Economics of Global Business Challenges

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Added on  2019-10-30

ECON802 - The Economics of Global Business Challenges

   Added on 2019-10-30

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Running head: ECONOMIC CASE STUDY ANALYSISECONOMIC CASE STUDY ANALYSISName of Student:Name of University:Author Note:
ECON802 - The Economics of Global Business Challenges_1
1ECONOMIC CASE STUDY ANALYSISTABLE OF CONTENTTASK-1:.....................................................................................................................................2TASK 2:.....................................................................................................................................4TASK 3:.....................................................................................................................................4TASK-4:.....................................................................................................................................5TASK-5:.....................................................................................................................................5REFERENCE.............................................................................................................................7
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2ECONOMIC CASE STUDY ANALYSISTASK-1:The Café Cartagena operated 10 hours on each Sunday and has 5 employees. Thepenalty rates given imposed by the government for working on Sundays are $40 per hour.This let the employees earn $400 each on Sunday. The cost of salary for the café owners is400*5=$2000. The others costs including coffee cups and electric charges are $500. The costof coffee machines is $1000. All these summed up to derive the accounting or explicit cost ofthe café. This amount fell when government reduced the penalty rate to $20 and that furtherreduced total accounting cost. The implicit costs are being the opportunity cost the firmundertakes for running the coffee shop on Sundays. The economic profit and accounting profit figure also changed and shown in thefollowing tables.Total Revenue from sales per Sunday$12,000Explicit CostWages to employees$2000Other costs (Coffee cups, electric etc)$500Cost of coffee machine$1000Total Explicit Cost$3500Accounting Profit (less Explicit Cost)$8500Table 1: Accounting Profit (Before Cut)Total Revenue from sales per Sunday$12,000Explicit Cost (After Cut in Penalty Rate)Wages to employees$1000Other costs (Coffee cups, electric etc)$500Cost of coffee machine$1000
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