Question

1.Suppose you are running your own flower delivery business (called Here Comes the Bloom) and have...

a.Calculate both the accounting and economic profits from running Here Comes the Bloom.

b.Based on the calculations in part a, what should you choose to do? Explain why briefly. Give a practical interpretation of the economic profit number as if explaining to a friend that has not taken economics.

2.Suppose Debbie notices the following relationship between how many workers she hires to work on her fishing boat, and how much fish her company catches (per day):

 Workers Qty of Fish (in pounds) Marginal Product Total Cost Average Total Cost Marginal Cost 0 0 1 120 2 220 3 300 4 360 5 400

a.Use the information in the table to complete the marginal product column. Explain briefly why the marginal productivity might follow this pattern.

b.Suppose Debbie has a fixed cost of \$100 per day to rent the boat and equipment. She must pay each worker \$120 per day. Use this information to complete the total cost, average total cost, and marginal cost columns in the table. a. Use the information in the table to complete the marginal product column. Explain briefly why the marginal productivity might follow this pattern.

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