Problem Set #1


  1. The owners of a company, Econ Air have hired a new vice president to run the company with the assumption that he/she will buy Econ Air after a period of five years. The compensation package for the new vice president is a fixed salary plus seventy-five percent commission of first $150,000 of profit, and then ten percent of profit over $150,000.  The purchase price for Econ Air is set as 4.5 times earnings (profit), calculated as average annual profitability over the next five years.  Does the contract align the incentives of the new vice president with the goals of the owners of Econ Air?


Don't use plagiarized sources. Get Your Custom Essay on
Problem Set #1
Just from $13/Page
Order Essay
  1. Sarah is considering leaving her current job, which pays $60,000 per year, to start a new company that produces a line of inkless pens. Market research suggests she can sell about 150,000 units during the first year at a price of $25 per pen.  With annual overhead costs and operating expenses amounting to $3,500,000, Sarah expects a profit margin of 7 percent.  This margin is 2 percent larger than that of her largest competitor, Pens, Inc.


  1. If Sarah decides to embark on her new venture, what will her accounting costs be during the first year of operation?  Her implicit costs?  Her total opportunity costs?
  2. How much revenue would she need to earn positive accounting profits?  Positive economic profits?
  3. Based on your analysis, what should Sarah do (what is her highest valued use)?


  1. Please complete the tutorial available at, titled Total Cost, Variable Cost, and Average Cost.


  1. Supporters of communist/command economic systems argue consumers pay lower prices for some goods and services because the government impose limits on what producers may charge. List at least two ways that consumers may not benefit (or how consumers pay in other ways for the lower priced goods).



Essay Assign
Calculate your paper price
Pages (550 words)
Approximate price: -

Our Advantages

Plagiarism Free Papers

All our papers are original and written from scratch. We will email you a plagiarism report alongside your completed paper once done.

Free Revisions

All papers are submitted ahead of time. We do this to allow you time to point out any area you would need revision on, and help you for free.


A title page preceeds all your paper content. Here, you put all your personal information and this we give out for free.


Without a reference/bibliography page, any academic paper is incomplete and doesnt qualify for grading. We also offer this for free.

Originality & Security

At Essay Assign, we take confidentiality seriously and all your personal information is stored safely and do not share it with third parties for any reasons whatsoever. Our work is original and we send plagiarism reports alongside every paper.

24/7 Customer Support

Our agents are online 24/7. Feel free to contact us through email or talk to our live agents.

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

We work around the clock to see best customer experience.


Flexible Pricing

Our prices are pocket friendly and you can do partial payments. When that is not enough, we have a free enquiry service.


Admission help & Client-Writer Contact

When you need to elaborate something further to your writer, we provide that button.


Paper Submission

We take deadlines seriously and our papers are submitted ahead of time. We are happy to assist you in case of any adjustments needed.


Customer Feedback

Your feedback, good or bad is of great concern to us and we take it very seriously. We are, therefore, constantly adjusting our policies to ensure best customer/writer experience.