Lara Started a Self-Employed Consulting Business in the Last Part

question 27

Essay

Lara started a self-employed consulting business in the last part of the year and earned $60,000 of net self- employment income.She had been employed as manager in a consulting firm prior to starting her own business and had earned $175,000.
(a)What is Lara's Additional Medicare Tax for 2013,if any?
(b)What is Lara's deduction for AGI for the Additional Medicare Tax?

Analyze the role and importance of sunk costs in economic and business decisions.

Understand the implications of fixed costs in the short and long term.

Distinguish between explicit and implicit costs in cost analysis.

Evaluate investment decisions taking into consideration the time value of money.

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Definitions:

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen over others.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually do pay.

Price Elasticity

The determination of how price alterations influence the market demand for a commodity.

Marginal Value

The additional satisfaction or utility received by consuming one more unit of a good or service.