Question 1: John Grisham saved $50,000 to start the J.G. Home Remodeling Company.He quit a job that paid $60,000 per year, rented a furnished showroom for $15,000 for the year, purchased $50,000 in capital equipment (an amount that could have earned an annual rate of interest of 5%), and incurred costs of $25,000 for secretarial help and advertising.In his first year, his revenue was approximately $100,000.

A. $100,000

B. $60,000

C. $40,000

D. $0

Question 2: The implicit cost of capital for the J.G. Home Remodeling Company is

A. $0

B. $2,500

C. $5,000

D. $50,000

Question 3: What are the implicit costs of the company?

A. $5,000

B. $25,000

C. $60,000

D. $62,500

Question 4: The economic profit of the company is

A. $60,000

B. $40,000

C. $0

D. -$2,500

Cost (C) Benefit (B)

Cost function: C = 4Q + 2Q Benefit function: B = 28Q - Q

Question 5: At Q = 2, total cost C = _____, and total benefit B = _____.

A. C=16 B=52

B. C=14 B=54

C. C=12 B=58

D. C=10 B=58

Question 6: The maximum gap between B and C, that is, the maximum net benefit, B C = ______.The maximum net benefit occurs at Q = ______.

A. B-C=45 Q=6

B. B-C=46 Q=5

C. B-C=48 Q=4

D. B-C=50 Q=3