Please answer the following questions on a separate sheet(s) of paper.  Be sure to put your name on you answer sheet(s).  You must show all work for credit!  Do your own work! 

1. A person managing a dry cleaning store for $30000 per year decides to open a dry cleaning store. The revenues of the store during the first year of operation are $100000 and the expenses are $35000 for salaries, $10000 for supplies, $8000 for rent, $2000 for utilities, and $5000 for interest on a bank loan. Calculate:
a. the explicit costs
b. the implicit costs
c. the accounting profit
d. the economic profit
e. Indicate whether the person should open the dry cleaning store

2. Answer the following questions:
a. What is the slope of the line that goes through (2, 5), (8, 2) [(x, y)]?
b. What is the slope of the line for which an equation is:
6x + 3y - 12 = 0
c. Is the following equation an equation for a demand or for a supply curve?
2q + 6p - 8 = 0

3. You are given the Total Cost function TC = (1 / 3)Q^3 - 8.5Q^2 + 60Q + 27
a.  Derive the AC and MC functions
b.  Explain the (graphical, i.e. in terms of slopes) relationship between TC and MC.
c.  Determine the level of output at which the total cost function is minimized and the level of the total cost.

4.  A market demand is such that if price is $10 per unit, the quantity demanded is 100.  For each $1 increase in price, the quantity demanded decreases by 20.  The quantity supplied is zero until the price reaches $5.  Above that price, the quantity supplied increases by 10 for each $1 increase in price. 
 a.  Determine the equation of the supply and demand curve. 
 b.  What are the demand and supply function?
 c.  What is the equilibrium price and quantity?

5.  Using the demand function
 Q = 300 - 10P 
 a.  Determine the equation of the total revenue (TR), average revenue (AR) and marginal revenue (MR).
 b.  Using the demand equation, complete a table for Q, TR, AR and MR where price varies from 1 to 10. 
 c.  Plot the total revenue function on one graph and the average and marginal revenue on another.
 d.  Determine mathematically at what quantity is total revenue maximized.  Check that you have maximized not minimized total revenue.
 

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