1. (1 pt each) Kofi, Carla, and Peter all mow lawns for money. Each of them operates a different lawn mower. The accompanying table shows the total cost to Kofi, Carla, and Peter of mowing lawns.

i. Who has increasing marginal cost

ii. Who has decreasing marginal cost

iii. Who has constant marginal cost?

Quantity ofLawns Mowed	Kofi's Total cost	Carla'sTotal cost	Peter'sTotal cost
0	0	0	0
4	80	8	40
8	140	28	80
12	180	68	120
16	200	128	160
20	208	208	200

2. (3 pts) You are a landowner who is considering an offer by a forestry consultant. The offer states that for a cost of $4500 you can conduct a thinning operation on your forestland. If you do this, the consultant says that in 30 years when you are planning to harvest, you would earn an additional $9,000 from the harvest. Assuming an interest rate of 4% answer the following questions:

a. What is the present value of the landowner's revenue after 30 years if he conducts the thinning? Please show your calculations.

b. Should you do the thinning?

Some Equations

PV = M / i PV = M/(1+i)^t

3. (3 pts) Which has a higher present value, apermanentannual payment of $70, or a single immediate payment of $1300? Assume an interest rate of 5% and show your work.

Some Equations

PV = M / i

PV = M/(1+i)^t

4. (2 pt) Thinking about the slope of the demand curve, if the price of an inferior good fell would the income effect be positive or negative? Please explain.

5. Given the following information for a consumer and assuming a fixed budget:

MU for mangos is 10 and price of mangos is $2.50 each

MU for pineapples is 20 and the price of pineapples is $5.00 each

Is this person maximizing total utility? How do you know?

6. (1 pts) As output increases, is the diminishing returns effect responsible for increasing ATC or decreasing ATC?

7. (1 pts) If marginal cost (MC) is constant, is total cost increasing, constant, or decreasing?