Final Exam November 13, 2017 Time: 2 hours 1. (15 points) Suppose you want to open a grocery store in Beijing. (1) What kinds of costs are you going

Final ExamNovember 13, 2017Time: 2 hours1. (15 points) Suppose you want to open a grocery store in Beijing.(1) What kinds of costs are you going to incur in order to start the business.(2) Which of these costs is explicit cost and which is implicit cost?.3) Are you going to manage the business on your own or you hire someoneto manage for you? Please explain why.(4) If you decide to hire a manager what kind of cost you will have to beworried about?2. (15 Points) The Table below describes the income elasticities of demand ofsome consumer goods and services:Goods and servicesIncome elasticityCars2.46Furniture1.48Restaurant meals1.40Water1.02Cigarette0.64Gas0.48Electricity0.20Margarine-0.20Pork-0.20Public transport-0.36What commodities and services are necessities?What commodities and services are luxuries?What are inferior goods (and services)?Can you distinguish the normal from the inferior goods and services inthe above table?3. (10 points) A labor-intensive Chinese firm is faced with rising labor costs.a) How is the firm's productivity affected. Please explain why?Should the firm adjust its capital-labor ratio to shift toward