Problem 1
Linda sells 100 bottles of homemade ketchup for \(\$ 10\) each. The cost of the ingredients, the bottles, and the labels was S700. In addition, it took her 20 hours to make the ketchup and to do so she took time off from a job that paid her S20 per hour. Linda's accounting profit_____________ is while her economic profit is_______________. a. \(\$ 700 ; \$ 400\) b. \(\$ 300 ; \$ 100\) c. \(\$ 300 ;\) negative \(\$ 100\) d. \(\$ 1,000 ;\) negative \(\$ 1,100\)
Problem 2
Which of the following are short-run and which are long-run adjustments? a. Wendy's builds a new restaurant. b. Harley-Davidson Corporation hires 200 more production workers. c. A farmer increases the amount of fertilizer used on his com crop. d. An Alcoa aluminum plant adds a third shift of workers.
Problem 4
Indicate how each of the following would shift the (1) marginal-cost curve, (2) average-variable-cost curve, (3) average-fixed-cost curve, and (4) average-total-cost curve of a manufacturing firm. In each case specify the direction of the shift. a. \(A\) reduction in business property taxes. b. An increase in the nominal wages of production workers. c. A decrease in the price of electricity. d. An increase in insurance rates on plant and equipment. e. An increase in transportation costs.
