Exercise 1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Million pesos to build and with...

Extracted text: Exercise 1. Planned Business 1: Upon initial collection of reliable data, a planned chocolate manufacturing business that will last for 20 years will be worth 140 Million pesos to build and with estimated average annual predicted sales of 40.12 million pesos and yearly total operational cost of 15.07 million pesos. Average annual inflation rate: 5 %, T-bill rate: 4.0%. Answer these questions: a) Would you pursue the said business? b) Why? Note: Please show all calculations. 2. Planned Business 2: Upon initial collection of reliable data, another planned business, a chain of ten (10) motorcycle repair shops in NCR is predicted to last for 20 years and would be worth 240 Million pesos to build and with estimated an average annual predicted gross revenues of about 50.3 million pesos and yearly total operational cost of 19.70 million pesos. Average annual inflation rate: 4.2 %, T-bill rate: 3.0%. Answer these questions: a) Would you pursue the said business? b) Why? Note: Please show all calculations. 3. Assuming, you only have enough resources for one business, which of the said businesses would you establish? Why? Please see next item on page 2. SHORT RUN PRODUCTION Short run Production In the short run, firms can for a time increase its output by adding units of labor/workers to its fixed plant. But by how much will output rise when it adds the labor and at what input level (VI) is profit at a maximum or loss at minimum and what would be the optimal output level? Let's find out by completing the table of data collected below. Php 10,000.00 Php 600.00 Variable TP (Q) (In thousands TR (Total revenue) = Qx Price Profit (TR -TC) at Price= Fixed Price = Input (L) (in thousands) Input (K) MP AP TFC TVC TC MC AFC AVC ATC Php 40.00 PhP 40.00 1.59 21.28 2.29 45.2 3.19 93.13 3.69 101.11 1 3.99 106.8 1 4.39 107.71 4.79 103.47 TR =Q x Price Profit = TR - TC Instructions/Question: a. What output level should be produced at a price of Php 40.00 per unit ? b. What should be the number of laborers used'employed if the price is Php 40.00 to maximize profit/minimize loss?