Scratch 1) Profits: Accounting vs economic (6 points) Consider Caroline Weaver's decision to open CW Pencil Enterprise (

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Scratch 1 Profits Accounting Vs Economic 6 Points Consider Caroline Weaver S Decision To Open Cw Pencil Enterprise 1 (56.59 KiB) Viewed 47 times

Scratch 1) Profits: Accounting vs economic (6 points) Consider Caroline Weaver's decision to open CW Pencil Enterprise (the speciality pencil shop you heard about at the start of the Freakonomics podcast). She estimates that she could sell 20,000 pencils per year at an average price of $5 each (remember these are fancy pencils). Each pencil will cost her about si to procure. She has found a storefront that will cost $4,000 per month to lease. Imagine these are her only costs and Caroline is the only person who works in the store. She has a degree in art & design from University of the Arts London and instead of opening a pencil shop she could work for an advertising firm making $50,000 per year. What would her accounting profits be? What would her economic profits be? Should she open the shop? Show your work and explain your thinking. 2) Production Function (9 points) Consider Jim Weissenborn's business, General Pencil, (the pencil manufacturer that you heard about in the Freakonomics podcast). Fill in the following hypothetical tables about his pencil production and graph the marginal product of labor (with the number of workers on the horizontal axis and the marginal product on the vertical axis):