1. During a year of operation, a firm collects $550,000 in revenue and spends $75,000 on labor expense, and $200,000 in raw materials, rent, and utilities. The firm's owner quit a job that would have earned him $75,000 annually and invested $750,000 of his own money instead of putting it in savings account which would earn a 10% interest annually. Answer the following questions based on the information above.

a. What is the accounting profit of this firm?

b. What is the implicit cost (the opportunity cost of using owner-supplied resources) of this firm?

c. What is the economic profit of this firm?

2. Suppose you are a producer and seller of wine. Explain whether the following events would affect the demand or supply of wine and the price you will receive.

a. The price of comparable imported wine decreases.

b. many new wineries open in the area.

c. Researchers discover that wine is good for health.

d. The cost of producing wine increases.

3. Suppose that the demand and supply equations for good X are:
Qd = 75 - 3P
QS = -20 + 6.5P