1. Why in the world would a business tolerate earning zero economic profit?

2. Given the information below for "Table are Us" carpentry shop:

a. Based on the Principle of Marginal Analysis, what is the optimal number of tables for this firm to build per day? b. Is marginal benefitincreasing, constant, or decreasing? c. What is the repair shop's maximum total profit?

Quantity of tables built per day	Total cost($)	Total benefit($)
0	0	0
1	40	75
2	90	160
3	150	250
4	220	350
5	300	455
6	390	570
7	512	690
8	640	815

3. Should the owner of a Christmas tree farm fertilize her plantation? The immediate cost is $55,000. As a result of the fertilization, the trees are expected to generate additional income of $15,000 each year for the next 4 years. Use an interest rate of 5% in your calculations and please show your work.

Some equations:	PV = M / i
	PV = M / (1 + i)^t

4. Which has a higher present value, an annual payment of $650, $20,000 payment to be received in 10 yearsor $9000 right now. Assume an interest rate of 5%.

5. With behavioral economics in mind, cite one of the "common mistakes in economic decision-making" and apply it to a simple example from your own experience.

6. Kofi won the lottery thisthis morning. The lottery only pays out the winning 20 years after you win. If the present value (PV) of Kofi's winnings to be paid out in 20 year is calculated to be $20 million dollars ( PV= 20,000,000) today, how much is Kofi going to be paid 20 years from now which will be equivalent to Kofi's the present value dollars computed?

(In other words, calculate the future value (M) in the formula).

Use an interest rate of 5% in your calculations and please show your work.

Some equations:	PV = M / i
	PV = M / (1 + i)^t