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ECON 207: Macroeconomics
Assignment#1
Name____________Sherita Knox______________________________________
Instruction: Please answer each questions with sufficient detail. Relevant detailed
responses are highly rewarded. If you consult any sources, then you should provide
both in-text citations and reference at the end for each responses. You need to make
sure at least consult your textbook for your responses.
1. Suppose Natasha currently makes $50,000 per year working as a manager at a
cable TV company. She then develops two possible entrepreneurial business
opportunities. In one, she will quit her job to start an organic soap company. In
the other, she will try to develop an Internet-based competitor to the local cable
company. For the soap-making opportunity, she anticipates annual revenue of
$465,000 and costs for the necessary land, labor, and capital of $395,000 per
year. For the Internet opportunity, she anticipates costs for land, labor, and
capital of $3,250,000 per year as compared to revenues of $3,275,000 per year.
(a) Should she quit her current job to become an entrepreneur? (b) If she does
quit her current job, which opportunity would she pursue? (30%)
