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A person has an expected utility function of the form U(w)=w^1/2.He has an initial wealth of $25.He also has a lottery ticket that will be worth $75 with probability 1/2 and will be worth $0 with pr
Southwest Airlines (SWA) is planning to expand its fleet of jets to replace some old planes and to expand its routes. It has received a proposal from Boeing to purchase some old planes and to expand
The lathe will cost $10,000. and will produce an annual income of $2,500 per year throughout its lifetime. It is anticipated that the cost of removal of the lathe will exceed its value as scrap at t
Suppose a competitive firm produces spaghetti dinners. The market price of a spaghetti dinner is $20. The cost of making the dinners is given by C(Q) = 10Q + (Q2/160). The marginal cost is given by
A firm has a production function f (k; l) = pkl. Suppose that in the short run the quantity of capital that the firm has to use is fixed at the level of 9 (and so k = 9), but when producing zero the
Suppose the market demand function for ice cream is and the market supply function for ice cream is , both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.
A tractor for over the road hauling is purchased for $ 90,000. It is expected to be of use to the company for 6 years, after which it will be salvaged for $ 4,000. Calculate the depreciation deducti
Suppose the production function is given by the following equation (where a and b are positive constants): Q=aL+bK. What is the marginal rate of technical substitution of labor for capital (MRTsL,K
Office building maintenance plans call for the stripping, waxing, and buffing of ceramic floor tiles. This work is contracted out to maintenance firms, and both technology and labor requirements are
Suppose that Amber's demand for gasoline is given by G = 1000 - 200PG, where G stands for gallons of gas and PG represents the price of gas. a. Suppose gas sells for $2 per gallon. What is Amber's c
Suppose the Federal Reserve Bank decides at its next FOMC meeting to raise the federal funds rate from around 0% to .25%. With the aid of a diagram, carefully explain how they will go about implemen
a firm in a purely competitive industry has typical cost structure. the normal rate of profit in the economy is 5 percent. this firm is earning $5.50 on every $50 invested by its founders. what is t
A bulldozer can be purchased for $380,000 and used for 6 years, when its salvage value is 15% of the first cost. Alternatively, it can be leased for $60,000 a year. Remember that lease payments occu
Suppose that Belgium cocoa beans can be sold in the U.S. The U.S. demand schedule for Belgium cocoa beans is as follows: Price of Belgium cocoa beans (per pound) Quantity of Belgium cocoa beans demand
Based on the information below about the production structure, explain whether the technology used in each part demonstrates constant returns to scale (CRS) or increasing returns to scale (IRS) prop
Based on the information below about the production structure, explain whether the technology used demonstrates constant returns to scale (CRS) or increasing returns to scale (IRS) property. The lab
a) If P= 10, what is the value of Co What is the equilibrium of GDP What is the level of consumer expenditures in equilibrium b) Leaving P as a variable, solve for equilibrium Y as a function of
laboratory equipment sells for $75,000. The manufacturer offices financing at 8% with annual payments for the 4 years for the $50,000 of the cost. The salesman is willing to cut the price by 10% if
Frequent moviegoers often note that movies are rarely based on original ideas. Most of them are based on a television series, a video game, or, most commonly, a book. Why a. Does a movie or a book h
The demand for widgets is found to be Q=100-11P +0.5Y, where P is the price of widgets in dollars, Y is average income in thousands and Q is the quantity of widgets in thousands. Say that P=7 and Y=
A private golf club has two types of members. Serious golfers each have a demand curve Q = 350 - P, where Q represents the number of rounds played per year and P is price per round. Causal golfers h
Assume that the marginal cost to grocery of selling a bottle of salad dressing to customers who use coupons versus those who don't is identical and equal to $1.50. If the elasticity of demand for co
Suppose that the market demand curve for a new drug is represented by P = 100 - 2Q, where P is the price in dollars per dose and Q is the annual output. (The marginal revenue curve is MR = 100 - 4Q)