The city of new orleans has 200 advertising companies, 199 of which employ designers of normal ability at a salary of $100,000 a year. the firms that employ designers of normal ability each collect $500,000 in revenue a year, which is just enough to ensure that each earns exactly a normal profit. however, the 200th company employs janus jacobs, an unusually talented designer. because of jacobs's talent, this company collects $700,000 in revenue a year.
a. how much will jacobs earn?
what proportion of his annual salary will be economic rent?
b. will the advertising company for which jacobs works be able to earn an economic profit?

Make or buy eastside company incurs a total cost of $120,000 in producing 10,000 units of a component needed in the assembly of its major product. the component can be purchased from an outside supplier for $11 per unit. a related cost study indicates that the total cost of the component includes fixed costs equal to 50% of the variable costs involved. a. should eastside buy the component if it cannot otherwise use the released capacity? present your answer in the form of differential analysis. use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers. cost from outside supplier $answer variable costs avoided by purchasing answer net advantage (disadvantage) to purchase alternative $answer b. what would be your answer to requirement (a) if the released capacity could be used in a project that would generate $50,000 of contribution margin? use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers.