Answer the following questions, one about production and one about costs.

Caroline opens a lemonade stand for two hours. She spends $15 for ingredients and sells $50 worth of lemonade. In the same two hours, she could have mowed the neighbor's yard and earned $10.

a. What are Caroline's explicit and implicit costs?

b. What is Caroline's accounting profit? What is her economic profit? Show how you calculated each profit.

1. The government imposes a $1,000 one-time license fee on all pizza restaurants. As a result, which of the following cost curves shift, and why or why not? a. Average total cost. b. Marginal Cost. c. Average Variable Cost.