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Volcano Winery produces white wines on the slopes of a Hawaii volcano. For each of the following, determine if the cost represents a fixed cost or a variable cost of producing the wines.

The rent paid for the thousand acres on which the wine grapes are grown.

		A. Variable cost.
		B. Fixed cost.

Volcano Winery produces white wines on the slopes of a Hawaii volcano. For each of the following, determine if the cost represents a fixed cost or a variable cost of producing the wines.

The workers who are hired and paid in the months of September and October to harvest the grapes from the vines. Fixed costs are those costs that do not change when output changes; that is, fixed costs are fixed (unchanged) regardless of the output level. Variable costs vary with the level of output.

		A. Variable cost.
		B. Fixed cost.

Volcano Winery produces white wines on the slopes of a Hawaii volcano. For each of the following, determine if the cost represents a fixed cost or a variable cost of producing the wines.

The annual lease paid for the equipment that is used to wash and mash the grapes to make the wine (assume that the lease fee has already been paid). Fixed costs are those costs that do not change when output changes; that is, fixed costs are fixed (unchanged) regardless of the output level. Variable costs vary with the level of output.

		A. Fixed cost.
		B. Variable cost.

Volcano Winery produces white wines on the slopes of a Hawaii volcano. For each of the following, determine if the cost represents a fixed cost or a variable cost of producing the wines.

The cost of transporting the wine from the winery to the retail stores that sell the wine.

		A. Fixed cost.
		B. Variable cost.

Under what conditions will a firm shut down operations in the short run? Identify an example you are familiar with, or have identified through research, of a business that has temporarily shut down operations in the short run. What led to this decision? Did the firm resume operations at a later date?

John is walking down the street. He is carrying explosives in a paper bag. John sees a friend and goes to waive at the friend dropping the bag and causing an explosion. Mary who was 5 feet away is injured by the explosion. Explain whether each of the legal theories of negligence, warranty and strict liability would apply or not.

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