Suppose the business owner just found out that there is a recall election for the governor (suppose we live in Wisconsin) and she now expects the demand for printed copies to increase to by an extra million to 4.5 million, but to be competitive she has to drop her price per copy to $0.04. To meet this demand, she will have to hire more labor and buy more supplies. So suppose that her labor costs increase to $7500, but the cost for paper and ink will decrease to $7000, because she now qualifies for a quantity discount. In addition the cost of electricity is expected to drop to $1650 because wind generation of electricity has improved and gotten cheaper, and the maintenance costs stay the same. For each of the changes above, circle below whether the change is positive or negative and whether the change in the rate of return, r, is positive or negative.

• Change in Quantity sold: + OR - ? in r: + OR

• Change in Price + OR - ? in r: + OR

• Change in Labor costs + OR - ? in r: + OR

• Change in Paper and ink + OR - ? in r: + OR

• Change in Electricity + OR - ? in r: + OR

Finally, calculate the new rate of return on the machine with the changes listed above in 2. Show your work.