Chapter 3 Key Concept Questions

1. Gross profit is a businesss profit before which other costs are subtracted?

3. For the following business, define the unit of sale and calculate the economics of one unit.

Sue, of Sues Sandwich Shoppe, sells sandwiches and sodas from a sidewalk cart in a popular park near her house. She sets up her cart in the summers to earn money for college tuition. Last month she sold her product (sandwiches and sodas) to 100 customers. She spent $210 on the sandwich ingredients and buying the sodas wholesale. Her unit is one sandwich ($4) plus one soda ($1).

Economics of One UnitSues Sandwich Shoppe

Selling Price per Unit

Cost of Goods Sold:

Other Variable Costs:

Cost of Goods Sold per Unit

Gross Profit per Unit

4. When Stephen Wozniak and Steven Jobs envisioned a computer in every home, computers were large, expensive objects. They were only available to the government, universities, scientists, and large companies. What technology currently available today to only a few people can you envision meeting a need for many consumers in the future?

5. Is there a service presently available to only a few consumers? Or one that is not available yet? Write about a service that you can imagine eventually becoming very popular and the need(s) it will meet.

6. If the FX rate between the U.S. dollar and the Japanese yen is 1:119, how many yen will it take to equal $20?

7. If the FX rate between the Japanese yen and the euro is 189.35:1, how many yen will equal 10 euros?