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Suppose Mr. Terry Goblin works part-time and earns $100. He gives up his job and decides to grow Turnips in Tolar Texas. Mr. Goblin has
Suppose Mr. Terry Goblin works part-time and earns $100. He gives up his job and decides to grow Turnips in Tolar Texas. Mr. Goblin has very modest fixed cash costs of only $25. Whenever he hires any workers, he pays the market rate of $75 per worker. Given this data, please answer the following questions: (a) Complete the table below; How many units would you recommend him to produce? (b ) Based on the data given, what are Terry's accounting profits is earning? Why? (c) Can you offer Terry a guiding economic "rule" to follow in decision making for the future? (d) If the fixed cost rises by $25, how many units will Terry produce and what will be his net profits? What will be the difference between his accounting and economic profits
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