Question

[7] Joey's Lawn Mowing Service rents office space from Joey's parents for $300 per month. A similar office space in the same building rents for $545 per month. Assuming Joey's parents accounting cost associated with the building is zero, the monthly economic profit earned by Joey's parents for renting space to Joey is: B. C. $845 $245 - $245 - 845 D. [8] At levels of a variable input where marginal product is less than average product, it must be that average product is falling. A. B. True False (9) Given that firms are rational (i.e., use inputs such that their marginal products are positive), isoquants will have a slope. positive negative zero All of the above are possible

Answer 1

Answer 7) economic profits= total revenue - totlal cost- total opportunity cost.

Economic profit= 300 -545= -$245

Option C is the correct answer.

Answer 8) it is true. When AP is less than MP, then AP must be falling

Answer 9) option A is the correct answer. Slope of isoquant is MRTS which is equivalent to the ratio of the marginal of capital and labor. If both the marginal product is positive then the slope is also positive .