Manuel lives in Dallas and runs a business that sells pianos. In an average year, he receives $726,000 from selling pianos. Of this sales revenue, he must pay the manufacturer a wholesale cost of $426,000; he also pays wages and utility bills totaling $264,000. He owns his showroom; if he chooses to rent it out, he will receive $13,000 in rent per year. Assume that the value of this showroom does not depreciate over the year. Also, if Manuel does not operate this piano business, he can work as a paralegal, receive an annual salary of $22,000 with no additional monetary costs, and rent out his showroom at the $13,000 per year rate. No other costs are incurred in running this piano business. Identify each of Manuel's costs in the following table as either an implicit cost or an explicit cost of selling pianos. Implicit cost Explicit cost The rental income Manuel could receive if he chose to rent out his showroom O O The wages and utility bills that Manuel pays O O The salary Manuel could earn if he worked as a paralegal O O O O The wholesale cost for the pianos that Manuel pays the manufacturer Complete the following table by determining Manuel's accounting and economic prot of his piano business. Profit (Dollars) Accounting Profit :] Economic Prot :I 2. Inputs and outputs Felix's Performance Pizza is a small restaurant in Houston that sells gluten-free pizzas. Felix's very tiny kitchen has barely enough room for the two ovens in which his workers bake the pizzas. Felix signed a lease obligating him to pay the rent for the two ovens for the next year. Because of this, and because Felix's kitchen cannot fit more than two ovens, Felix cannot change the number of ovens he uses in his production of pizzas in the short run. However, Felix's decision regarding how many workers to use can vary from week to week because his workers tend to be students. Each Monday, Felix lets them know how many workers he needs for each day of the week. In the short run, these workers are inputs, and the ovens are variable inputs. variable, fixed fixed Felix's daily production schedule is presented in the following table. Fill in the blanks to complete the Marginal Product of Labor column for each worker. Labor Output Marginal Product of Labor (Number of workers) (Pizzas) (Pizzas) U 100 180 A W N 240 280 300 On the following graph, plot Felix's production function using the green points (triangle symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. Hint: Be sure to plot the first point at (0, 0). ? 300 270 240 Production Function 210 180 QUANTITY OF OUTPUT (Pizzas) 150 8 30 2 3 LABOR (Number of workers)Suppose that labor is Felix's only variable cost and that he has a fixed cost of $50 per day and pays each of his workers $40 per day. Use the orange points (square symbol) to plot Felix's total cost curve on the following graph using the quantities from the preceding table. 300 270 240 Total Cost 210 180 150 TOTAL COST (Dollars) 120 90 30 0 30 60 90 120 150 180 210 240 270 300 QUANTITY OF OUTPUT (Pizzas) The law of diminishing marginal product of labor is demonstrated by which of the following? O Total output increases at a decreasing rate as you increase the quantity of labor. O Total output declines as you increase the quantity of labor. O Total output increases only when you increase both labor and ovens.3. Various measures of cost Douglas Fur is a small manufacturer of fake-fur boots in San Francisco. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Pairs) (Dollars (Dollars (Dollars) (Dollars) (Dollars per pair) (Dollars per pair) 0 120 210 270 315 A W 380 5 475 630 876 On the following graph, plot Douglas Fur's average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $210, so you should start your ATC curve by placing a green point at (1, 210). For MC, plot the points between the integers: For example, the MC of increasing production from zero to one pair of boots is $90, so you should start your MC curve by placing an orange square at (0.5, 90).) Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. 240 A 210 ATC 180 150 AVC COSTS (Dollars per pair) 20 -0 90 MC 60 30 5 QUANTITY (Pairs of boots)