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Irving and his wife Gertrude decide to take their life savings of $20,000 to buy a small retail shop. They plan to make and sell tie-dyed, University of Kentucky T-shirts. They hire a professional tie-dyer for $6.00 an hour who makes 20 t-shirts per hour. The following are needed to produce the shirts: dye, costing $1 per shirt, plain white t-shirts costing $1 each and an industrial washing machine for $1000.
1. The following represent fixed inputs in the short run for Irving and Gertrude:
1) Professional tie-dyer and washing machine.
2) Professional tie-dyer and dye.
3) Retail shop and washing machine.
4) Retail shop and T-shirts.
2. The total cost to produce 100 T-shirts is:
b. c. d.
1) $1,230
2) $230
3) $21,000
4) $21,230
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