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Unformatted text preview: omics 101.007, Fall 2011 4 Background for 14 and 15. George has started a dog‐walking business to earn a bit of spending money while on campus. He has a few leashes from his earlier attempts at dog ownership, and so his only costs are the foregone study time associated with these dog walks. He earns $10 per hour walked, but as the hours rise he values more and more the studying foregone. Dogs Walked (one per hour) 1 2 3 4 5 6 7 Total value of study foregone $6 $14 $24 $36 $50 $66 $84 14. If George follows the rational supply rule, he will walk: a. one dog b. three dogs c. five dogs d. seven dogs e. none of the above 15. George purchased a leash for $20 a few years ago to walk his own dog. That dog passed away two years ago, and the leash has been sitting around unused. What kind of cost does this leash represent for his new business? a. fixed cost b. variable cost c. implicit cost d. sunk cost e. none of the above. 16. A perfectly competitive firm is one that has ______________ influence over the ______________ at which it sells its product. a. perfect, location b. strong, price c. little, location d. no, price e. none of the above 17. A profit‐maximizing perfectly competitive firm will fi...
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