3 45 points I am considering opening up a smoothie stand in Walla Walla,* During this process I need help analyzing the inner workings of my firm as well as the Walla Walla labor market when making hiring decisions. (a) (5 points) Draw typical marginal cost and average total cost curves for a firm's output. Describe the shape of the average total cost curve. (b) (5 points) How does the market for inputs (e.g. labor, bananas, strawberries) differ from the market for outputs (e.g. smoothies)? Why do we treat the input market a bit differently? Briefly Explain. (c) (7 points) Assume the labor market is perfectly competitive. Provide the profit (or value) maximizing condition that my smoothie stand must satisfy when hiring labor. Describe each component. (d) (7 points) Describe how the supply of labor can potentially respond differently than the supply of other inputs as a result of an increase in the input price. (e) (7 points) Suppose that Walla Walla is considering an increase in the minimum wage (which I was going to pay the smoothie stand workers). Draw the supply and demand for a perfectly competitive labor market. Now describe why some may feel that an increase in the minimum wage may introduce inefficiencies. (f) (7 points) Given that I have yet to see another smoothie stand in Walla Walla it may be that my firm is the only one hiring this type of specialized smoothie labor. Depict this type of labor market on a graph. Describe why the relationship between what I spend on labor on average and my additional expenditure on labor is the way you have drawn it. (g) (7 points) Would a minimum wage have the same effect in part (f) as it did in part (e)? Why or Why not? Briefly Explain. 4 40 points2) Which model would like to choose and why? 3) Observe the data. The last two observations have zero advertisements on Radio&TV. Other values of Radio&TV are in a range between 25 and 70. So it may not be appropriate to include those two observations on regression models with Radio&TV because those outliers may distort the relationship between Sales and Radio&TV. As you did in question 1, develop linear regression models with the below two combinations. The model of (Sales vs. Newspaper) was considered with all available data in the previous question. Report and judge the model as question 1. a) Sales vs. Radio&TV without the last two observations b) Sales vs. Radio&TV and Newspaper without the last two observations 4) Which model would like to choose in the five models you made and why? 5) For the model you chose in question 4, make a more detailed report. Check assumptions. Interpret coefficients. Describe your findings.Exercise: An econometrician estimated a regression of C on Y where C denotes real personal consumption (in billions of dollars) and Y denotes real personal disposable income (in billions of dollars) using 74 observations. Consider the regression results, including the ANOVA table, are provided in the GRETL output below: Model 1: OLS, using observations 1929-2002 (T = 74) Dependent variable: C Coefficient Std. Error I-ratio p-value const -49.7522 17.8767 -2.7831 0.00687 Y 0.917396 0.00541175 169.5192 0 by constructing a confidence interval. Use 5 percent level of significance. (xi) Repeat (x) using the level of significance approach (xii) Repeat (x) using the p-value approach. (xiii) Confirm that the F-statistic reported in the ANOVA table is exactly the square of the t-ratio for the slope coefficient. This is always the case in a linear regression with one regressor