1. The Cleaning Crew cleans 100 homes per week and earns a weekly economic profi

Question

1. The Cleaning Crew cleans 100 homes per week and earns a weekly economic profit of $200. The Cleaning Crew charges $80 per home. What is the Cleaning Crew's total cost per week?
2. What is the lowest value of economic profit that the firm must earn if it is to keep its resources in the current industry?
A. Zero economic profit

B. Economic profit equal to explicit costs of production
C. Economic profit equal to implicit costs of production
D. Economic profit equal to 10% of the cost of capital
E. Economic profit equal to 10% of the cost of capital plus labor
3. In the short run, Southern Exposure has the following production function, which shows the relationship between number of workers employed and number of lawns it maintains each month.

Workers            Lawns Maintained
                        (Number per month)
1                            70
2                            130
3    170
4                            190
True or False: Because marginal product is positive in this example, there is no evidence of diminishing returns to labor.

Explanation / Answer

1 = 7800

2 = a

3 = false

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