1. 'We said that the production function tells us the maximwm output that a firm can produce with its quantities of inputs. Why do we include the word maximuwm in this definition? 2. A grocery shop is owned by Mr. Moare and has the following statement of revenues and costs: Revenues $250,000 Supplies $25,000 Electricity 46,000 Employee salarnies 375,000 Mr. Maoaore's salary $80.000 Mr. Moaore always has the option of closing down his shop and renting out the land for $100,000. Also, Mr. Moore himself has job offers at a local supermarket at a salary of $95,000 and at a nearby restaurant at $65,000. He can only work one job, though. What are the shop's accounting costs? What are Mr. Moore's economic costs? Should Mr. Moore shut down his shop? 3. Werner & Sons is a manufacturer of three-ring binders operating in a perfectly competitive industry. 5 = = a. Complete the Table by filling in the blank cells. b. Werner is selling in a perfectly competitive market at a price of $40. What is the profit maximizing or loss-minimizing output? c. Calculate the firm's profit or loss. d. Should the firm continue to produce in the short run? Explain. e If the firm's fived costs were $30 higher what would be the profit-maximizing output level in the short run? Indicate whether the output level will increase, decrease or remain unchanged compared to your answer in b. f. Suppose fixed cost remains at $76. If the price of three-ring binders falls to $20 what is the profit-maximizing or loss-minimizing output? g. Calculate the profit or loss. Should the firm continue to produce in the short run? Explain your answer. h. Suppose the fixed cost remains at $76. What price corresponds to the shut-down point? I Suppose the fixed cost remains at $76. What price corresponds to the break-even point