Fifth question

Answer the 5th question plus 1 more from questions 1–4. Then reply to 1 classmate’s thread.

  1. Before Sarah quit her job as a carpenter, she was earning $35,000 per year. She rented a building for $12,000 per year and opened a cabinet shop. She spends $148,000 per year for labor, materials, utilities, and advertising.
    • How much revenue will the business have to earn in order to break even in terms of business profit?
    • How much revenue will the business have to earn in order to break even in economic terms?
    • Suppose that Sarah buys the building. Now how much will the business have to earn in order to break even in economic terms?
  2. What might be the objective of a museum? Of a firm? Do they have the same objective? Why or why not?
  3. What is the difference between unethical and unlawful behavior? Please provide examples for both behaviors in your discussion.
  4. In your opinion, how much time should a consumer spend on shopping (searching) for lower prices (you may want to apply the marginal analysis)?
  5. According to Milton Friedman, “Business has only one social responsibility – to make profits (as long as it stays within the legal and moral rules of the game established by society). Few trends could so thoroughly undermine the very foundations of our society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.” Explain why you agree or disagree with such a statement.

Additional information:

  • Milton Friedman was the recipient of the Nobel Memorial Prize in Economic Sciences in 1976.
  • “Not looking to your own interests but each of you to the interests of the others” (Philippians 2:4, NIV).
  • Target’s community giving: “Target has a long-standing tradition of strengthening families and communities through innovative programs and partnerships. Since 1946, we have contributed 5 percent of our annual income to support families and communities, and today we remain one of very few companies that maintain this level of sustained giving. Target gives more than $3 million each week to the communities in which we do business. Our giving is directed both by Target and by the Target Foundation, each with specific areas of focus and commitment” (Target Corporate Responsibility Report 2007, p. 3).


Froeb, L. M., McCann, B. T., Ward, M. R., & Shor, M. (2016). Managerial economics: A problem solving approach (4th ed.). Boston, MA: Cengage Learning. ISBN: 9781305259331.

Salvatore, D. (2015). Managerial economics in a global economy (8th ed.). New York, NY: Oxford University Press. ISBN: 9780199397129

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