Problem 1
A hair salon offers three services: haircuts, color treatment, and styling. The salon charges \(\$ 40\) for a cut, \(\$ 65\) for color, and \(\$ 30\) for styling. Last month, the salon sold 68 haircuts, 34 color treatments, and 22 styling sessions. If the salon's costs for the month totaled \(\$ 2,843,\) what was its profit? \(\left[\mathrm{LO}_{12}, 1\right]\)
Problem 2
Lisa is a self-employed physical therapist who works from a rented space. Lisa charges \(\$ 250\) for a therapy session. She incurred the following costs last month: space and equipment rental, \(\$ 1,200\); wages, \(\$ 3,500 ;\) materials, \(\$ 1,800 .\) If Lisa's profit last month was \(\$ 2,000\), how many clients did she see? \(\left[\mathrm{LO}_{12} .1\right]\)
Problem 3
Kat runs a cake shop. Her monthly expenses are listed below. For each cost, indicate whether the cost is a fixed cost or a variable cost of producing cakes in the short run. [LO 12.2\(]\) a. Ingredients (flour, butter, sugar). b. Bakers (cooks). c. Rent. d. Payments for equipment (ovens). e. Interest payments for borrowed capital.
Problem 5
Paola is thinking of opening her own business. For each of the production inputs listed below, indicate whether the input incurs an implicit cost, explicit cost, or no cost. [LO 12.3] a. Rent. b. Wages. c. Owned equipment.
Problem 6
Paola is thinking of opening her own business. For each of the production inputs listed below, indicate whether the input incurs an implicit cost, explicit cost, or no cost. [LO 12.3\(]\) a. Borrowed capital. b. Investment from savings. c. Donated supplies.
Problem 7
Keri owns a landscaping business. For each of Keri's inputs given in the list below, indicate whether the associated cost is fixed or variable, explicit or implicit, and whether the cost affects accounting profit only, economic profit only, or both. [LO 12.2,12.3,12.4\(]\) a. Landscapers. b. Plants taken from her home garden. c. Truck rental. d. Owned lawn mowers.
Problem 9
If adding an additional input does not produce additional output, what is the slope of the production function at this point? [LO 12.5\(]\)
Problem 13
The dean of a college faces the following costs: graders, faculty, classroom space, and chalk. Of these costs, which are likely to be variable in the long run? [LO 12.7\(]\)
Problem 14
In the pet industry, would you expect the long run to be longer for a pet store or a veterinary clinic? \([\mathrm{LO} 12.7]\)
Problem 15
Consider a firm that increases its inputs by 15 percent. For each scenario, state whether the firm experiences economies of scale, diseconomies of scale, or constant returns to scale. [LO 12.8\(]\) a. Outputs increase 15 percent. b. Outputs increase by less than 15 percent. c. Outputs increase by greater than 15 percent.
