9.1. The annual accounting statement of revenues and costs for a local flower shop shows the following: Revenues $250,000 Supplies $ 25,000 Employee salaries $170,000 If the owners of the firm closed its operations, they could rent out the land for $100,000. They would then avoid incurring any of the expenses for employees and supplies. Calculate the shop's accounting profit and its economic profit. Would the owners be better off operating the shop or shutting it down? Explain. 9.2, Last year, the accounting ledger for an owner of a small drug store showed the following information about her annual receipts and expenditures (she lives in a tax-free country, so don't worry about taxes): Revenues $1,000,000 Wages paid to hired labor (other than herself) $ 300,000 Utilities (fuel, telephone, water) $ 20,000 Purchases of drugs and other supplies for the store $ 500,000 Wages paid to herself $ 100,000 She pays a competitive wage rate to her workers, and the utilities and drugs and other supplies are all obtained at market prices. She already owns the building, so she pays no money for its use. If she were to close the business, she could avoid all of her expenses and, of course, would have no revenue. However, she could rent out her building for $200,000. She could also work elsewhere herself. Her two employment alternatives include working as a lawyer, earning wages of $100,000, or working at a local restaurant, earning $20,000. Determine her accounting profit and her economic profit if she stays in the drug store business. If the two are different, explain the difference. 9.3. A firm sells a product in a perfectly competitive market, at a price of $50. The firm has a fixed cost of $30. Fill in the following table and indicate the level of output that maximizes profit. How would the profit-maximizing choice of output change if the fixed cost increased from $30 to $60? More generally, explain how the level of fixed cost affects the choice of output. Output (units) Total Revenue ($/unit) Total Cost ($/unit) Profit ($) Marginal Revenue ($/unit) Marginal Cost ($/unit) o o 50 20 30 42 54 70 G W N = 9.4. A firm can sell its product at a price of $150 in a perfectly competitive market. Below is an incomplete table of a firm's various costs of producing up to 6 units of output. Fill in the remaining cells of the table, and then calculate the profit the firm earns when it maximizes profit. Q TC TVC AFC AC MC AVC 1 200 2 100 3 20 4 240 5 24 6 660 160 9.5. A competitive, profit-maximizing firm operates at a point where its short-run average cost curve is upward sloping. What does this imply about the firm's economic profits? Briefly explain