Table 8.2 -Mitzi's Pet Salon Hires You to Determine the Company's Status.The

question 55

Essay

Table 8.2
-Mitzi's Pet Salon hires you to determine the company's status.The data in Table 8.2 provides information on the company's annual costs and revenues.Mitzi spends at least 40 hours a week at her place of business.If she closed the salon,she could work for her competitor and earn $15,000 per year.She also owns the building that houses the salon and could rent it out for $18,000 per year if she closes her business.Calculate the economic cost and economic profit for Mitzi's Pet Salon.Would an accountant come to the same conclusion about the profitability of this firm? Explain.

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Definitions:

Optimistic Bias Heuristic

A cognitive shortcut that leads individuals to believe that they are less likely to experience negative events compared to others.

Error

A mistake in reasoning, action, or calculation that may lead to incorrect conclusions or outcomes.

Judgment

The ability to make considered decisions or come to sensible conclusions based on a critical assessment of evidence and reasoning.

Satisficing Heuristic

A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution.