1. Explain with an example the difference between Accounting and Economic cost. (10 points) 2. General Electric Company purchased a machine for $16,000 that has a current market value of $12000 and is expected to have value of $8000 after one year. The machine has a 10-year life and capable of producing 2500 units output per year. (a) What will be the Economist's measure of depreciation? (5 points) (b) What will be the Economist's depreciation cost per unit? (5 points) (c) What will be the Accounting measure of depreciation? (5 points) (d) What will be the Accounting depreciation cost per unit? (5 points) (READ PAGE 284 FOR THIS PROBLEM). 3. From your knowledge of the relationships among the various cost functions, complete the following table. (READ PAGE 290-291) (30 points) Q TTC TFC TVC ATC AFC AVC MC 0 1 00 10 3 20 7.5 30 65 40 177 50 1.74 60 1.3 70 3.14 80 160 4. If Fixed Cost = 500, Variable Cost = 70Q - 5Q' +0.12Q', find (10 points) (READ PAGE 291) (a) TC for Q units of output. (b) ATC for Q units of output. (c) AFC for Q units of output. (d) AVC for Q units of output. (e) MC for Q units of output. (You need to apply the rule of derivative).5. Robert James worked as a real estate agent for Simms Reality for 12 years. His annual income is approximately $120,000 per year. Robert is considering establishing his own real estate agency. He expects to generate revenues during the first year of $3 million. Salaries paid to her employees are expected to total $2 million. Operating expenses (L.e., rent, supplies, utility services) are expected to total $300,000. To begin the business, Robert must borrow $550,000 from his bank at an interest rate of 15 percent. Equipment will cost Robert $75,000. At the end of one year, the value of this equipment will be $40,000, even though the depreciation expense for tax purposes is only $8,000 during the first year. a. Determine the (pre-tax) accounting profit for this venture. (6 points) b. Determine the (pre-tax) economic profit for this venture. (6 points) c. Which of the costs for this firm are explicit and which are implicit? (6 points) (READ EXAMPLE OF PAGE 285 FOR THIS PROBLEM). 6. Summarized the example of page 300 focusing the central concept. (12 points)