Q1:

You are dissatisfied with your current job and want quit to start your own consulting using a room in your home as an office. You talk to your account and bring her the following information:

projected sales (in units) : Q= 1000

projected price: P= 10

Projected average cost: AC =6

Your accountant says that you are expected to make $40,000 in this new business so she gives you to ok to do it.

Select the best statement below based on this information.

A. your accountant is correct because average profit per unit is $4 and that implies profits of $40,000

B. your accountant is wrong because she did not include forgone wages or the cost of using your own house

C. your accountant is right about opening the business, but wrong about profits because profits are higher since you don't need to pay for office space

D. your accountant is right about opening the business, but wrong about profts because profits are lower since she has not included your forgone wages

Q2:

Use the table, with data for workers and firms, to answer the question. The payoff cells are labeled A, B, C, and D. Table: Spending and Producing Firms produce and hire a Firms cut back on production and lot. hiring. Workers spend a lot. A. Workers spend a lot, B. Workers overspend, and firms and firms hire a lot. underproduce. Workers cut back on C. Workers underspend, D. Workers spend little, and firms spending. and firms overproduce. sell little. There are multiple equilibria in the table. The desired outcome is cell A, but there is an equal chance of an equilibrium outcome in cell D. Which of the following is an appropriate approach to resolving the problem through communication, so that the outcome in cell A is likely