Participation Homework #5 ($9,500): Due Thursday, November 14 th by the end of your scheduled section.Name: ________ Jessica Matza _____________ PSU User ID (abc5xxx): ___________ jmm6862 _____________ Section: 004 Directions: Homework must be stapled, attached with a paper clip or some other bonding agent, or placed in a plastic folder. There will be a 10% penalty for homework which is submitted onunattached pieces of paper.Homework that is all handwritten will receive a zero. Only graphs may be hand drawn provided they are neat (include all relevant labels & arrows). Equations & calculations MUST BE TYPED; otherwise you will receive a maximum of half credit for that question. NO EMAIL SUBMISSIONS. The homework is collected in class. If you can’t be in class then send your homework with a friend or turn it in early by sliding it under my door (306 Kern) with your name and section time clearly marked. NO late homework is accepted.Reminder: You may work in groups but you must write up you own unique responses. Youmay ask questions about the homework on the Facebook group – however, DO NOT SIMPLY ask what the answer is. Explain what you think the answer is and your logic/reasoning, so that someone else can provide real help.1. Indicate whether the following are private goods, club goods, common resource goods, orpublic goods.A) A bacon double cheeseburger. Private GoodB) Fly fishing on Penn’s Creek. Common Resource GoodC) A concert by DayGlow. Club GoodD) Street lights. Public Good2. Kyle is a college student who works summers to pay for tuition. Last summer he workedat a fast food restaurant and earned $2,500. This summer he is working as a painter andwill earn $4,000. To do the painting job, Kyle had to purchase $200 of supplies. Question: What is Kyle’s accounting profit?(Accounting Profit= Revenues – Explicit Costs) Kyle’s Accounting Profit = $6,500 - $200 = $6,300Question: If working at the fast food restaurant was Kyle’s next best alternative, how mucheconomic profit will Kyle earn from painting? ($250)Economic Profit = Revenues – All Costs Kyle’s Economic Profit = $4,000 - $2,700 = $1,3003. It’s a hot day and customers are lined up for snow cones at your small stand. The following table shows your firm’s short-run production function for snow cones. When does diminishing marginal product begin? Explain your answers in 2 sentences. ($1,000)Number ofWorkersTotal Output ofSnow Cones per hour0 01 152 403 754 955 1056 1107 1128 90The diminishing marginal product begins after the 3rd worker because this is when the change intotal output of snow cones per hour turns around and goes from increasing to decreasing. The optimal number of workers is 3 and any amount beyond that will slow down the production of snow cones leading to a decrease in the change in total output. 4. The Office provides an amusing episode devoted to the discussion of costs. https://drive.google.com/folderview?id=0ByZgnIP0zJ4OX09ZbXBQbXNFNVU&usp=sharingMichael Scott establishes his own paper company to compete with both Staples and hisformer company, Dunder & Mifflin. What is the problem with this strategy? ($1,000)They can’t afford to pay a delivery guy because their prices are too low. They need to use avariable cost pricing model instead of a fixed cost. At their prices, the more paper they sell, theless money they will make. The prices that Michael Scott is using for his own paper company isputting him out of business. 5. You and your family travel to Orlando for a week. While there you decide to visitUniversal Studios. When you get there you notice that each family member can buy a daypass for $70 or a two-day pass for $100. Your parents are concerned about spending toomuch, so they decide to calculate the average cost of a two-day pass to see if it is worth it.The average cost is $100 ÷ 2, or $50 per day. The math is correct but something youlearned in economics tells you that they are not thinking about this the correct way. What economic concept can you apply to make the decision more clear? ($1,000)The economic concept you can apply to make the decision more clear is Marginal Analysis. They need to look at the marginal cost instead of the average cost. The Average Cost for the 2 days is $100. The Marginal Cost of the 2nd day is $30.6. A pizza business has the cost structure described below. The firm’s fixed costs are $25 per day. Calculate the firm’s total fixed costs, total variable costs, average fixed costs, average variable costs, average total costs, and marginal costs for each level of output. ($2,000)Output (pizzas perday)Total Cost of Output0 $2510 7520 11530 15040 17550 19060 20570 22580 250Type your answer into the table below!Output(pizzasperday)TotalCost ofOutputTFC TVC AFC AVC ATC MC0 25 25 0 - - - -10 75 25 50 2.5 5 7.5 520 115 25 90 1.25 4.5 5.75 430 150 25 125 .833333334.16666667 5 3.540 175 25 150 .625 3.75 4.375 2.550 190 25 165 .5 3.3 3.8 1.560 205 25 180 .416666673 3.41666667 1.570 225 25 200 .357142862.85714286 3.21428571 280 250 25 225 .3125 2.8125 3.125 2.57. A firm is considering changing its plant size. It runs the numbers and calculates the average cost of production for various plant sizes below. If the firm is currently using plantsize C, is the firm experiencing economies, diseconomies, or constant returns to scale? Explain your answer in 2 sentences. ($1,000)Plant Size Average Total Cost A (smallest) $10,000B 9,500C 9,000D 8,800E 8,800F (largest) 8,900At plant size C the firm is experiencing economies of sale. This is because the ATC is falling as Q (plant size) is rising 8. True or false? ($1,000)A) The AFC curve can never rise. TrueB) Diminishing marginal product is a long-run constraint that prevents lower costs. TrueC) The MC curve intersects the AVC and ATC curves at the minimum point along both curves. TrueD) Total cost divided by output is equal to marginal cost.