# accounting department

a. Profits grow at an annual rate of 10 percent. (This one is tricky.)

**Instructions:** Round your responses to 2 decimal places.

b. Profits grow at an annual rate of 3 percent.

billion

c. Profits grow at an annual rate of 0 percent.

billion

d. Profits decline at an annual rate of 2 percent.

billion

a. How much output is produced when*K*= 2 and*L*= 3?

b. If the wage rate is $70 per hour and the rental rate on capital is $45 per hour, what is the cost-minimizing input mix for producing 9 units of output?

Capital:

Labor:

c. How does your answer to part b change if the wage rate decreases to $45 per hour but the rental rate on capital remains at $45 per hour?

Capital increases and labor decreases. | |

Capital and labor increase. | |

Capital decreases and labor increases. | |

It does not change. |

Based on this information, what would be the nonpecuniary cost of legislation that would place a $0.75 cap on the fees banks can charge for noncustomer transactions?

**Instructions**: Round your answer to the nearest penny (2 decimal places).

$

What would be the full economic price of this legislation?

$