1. Alexa's economic profit in the snow-clearing industry is zero. This means that:

a.

she should continue operating her business her accounting profit in the slow-clearing industry is higher than the accounting profit she could earn in her next best alternative occupation.

b.

she should exit because she may be able to earn a higher economic profit in an alternative occupation.

c.

she should exit because she will not be able to make a living in this industry.

d.

she could continue operating her business because her accounting profit in the slow-clearing industry is equal to the accounting profit she could earn in her next best alternative occupation.

2. Wenqin is a farmer. In the short run:

• she produces 170 bushels of wheat
• her average total cost per bushel of wheat is $4.
• her total revenue is $1130.
• her total fixed costs are $10.

What is Wenqin's profit per bushel?

3. Zoe's bakery operates in a perfectly competitive industry. Zoe's marginal revenue at the profit maximizing output level of 230 cupcakes is $27. Her average total cost is $12, and her average variable cost is $6.

Zoe's short-run profits are ?

4. Zoe's bakery operates in a perfectly competitive industry. Zoe's marginal revenue at the profit maximizing output level of 340 cupcakes is $29. Her average total cost is $14, and her average variable cost is $4.

Zoe's marginal cost at the profit-maximizing output is ?

5. Consider a firm with some market power, that faces a downward-sloping demand curve. It is currently selling 29 units at a price of $18. In order to sell an extra unit, it has to reduce its price by $1.

What is its marginal revenue if it sold that extra unit?