1)Use the table below to answer the following questions. Assume that fixed costs are $100 and labor is paid $80 per unit (employee).

Complete the table. (18 points)

a) Graph ATC, AVC, AFC, and MC

2)Jack left a job that paid $50,000 per year to start his own business in a building he owns. Similar buildings rent for $10,000 per year. Over the course of the year, Jack paid his part-time employees $75,000 and paid $150,000 for supplies. What is the economic cost of Jack's business? (1 point)

3)Beaverduck Bus Company wants to compute the cost of adding a third daily bus between Eugene and Corvallis, Oregon. Comment on the following statement of Abby Abacus, the company's accountant: "If we add the third bus, our total cost would increase form $700 to $780. Therefore, the marginal cost of the third bus is $260 ($780 divided by 3)." (2 points)

4)Use the accounts listed below to answer the questions about the profit of a business.

Total Revenue ..........................................................................$100,000

Hired Labor ..............................................................................$25,000

Materials Purchased .....................................................................$25,000

Interest that the owner could have earned on an alternative investment ......... $5,000

Income the owner could have earned by renting the firm's building ............. $4,000

Utility Payments ..........................................................................$5,000

Income the owner could have earned in an alternative business venture ........$30,000

Cost of shipping the firm's output to buyers ....................................... $1,000

a)Identify the explicit costs incurred by this business. Why are they explicit costs? (2 points)

b)Identify the implicit costs incurred by the business. Why are they implicit costs? (2 points)

c)How much accounting profit does the firm make? Show your work. (2 points)

d)How much economic profit (loss) does this firm make? Show your work. (2 points)

e)If these financial results continue in the long run, will this firm stay in this business? (2 points)

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