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(1) suppose you win a state lottery. the prize is $1,000,000 but it is paid over 10 years in equal installments of $100,000 each. what is the prize actually worth?
2. Consider the utility function U(x, y) = 3x - y with MUx = 3 and MUy = -1.a) Is the assumption that more is better satisfied for good x? Is it satisfied for good y?b) Does the marginal utility of x diminish, remain constant or increase as the consumer buys more x?c) What is MRS?d) Is MRS diminishing, constant or increasing as the consumer substitutes x for y along an indifference curve?e) On a graph with x on the horizontal axis and y on the vertical axis draw a typical indifference curve when utility level is U1.f) On the same graph draw a second indifference curve U2 with U2 > U1.
3. Jane's utility function is U(x,y) = 2 x2 y with associated marginal utility functions MUx = 4xy and MUy = 2x2. Jane has income I and prices of x and y are respectively given by Px and Py.a) Determine Jane's demand for x as a function of income and prices.b) Assume now that her level of income and prices are set at the following values: I = 30, Px = 2, Py = 1. Determine her choices of x and y and compute the level of utility she gets.
4. Paul consumes apples and bananas. His utility function is U(a,b)=a1/2+b. The price of bananas is Pb=4. The price of apples is initially Pa=1 but then rises to Pa=2. Paul's income is I=10.a) Compute Paul's demand for apples and bananas before the price change.b) Compute Paul's demand for apples and bananas after the price change.c) How much income do we need to give Paul after the price increase in order to keep him as happy as he was before? i.e. in order to keep him at the same level of utility he had before the price change?
Although it is impossible to make a pile of money worth exactly $3, it is still possible to buy something that costs $3. You can give two $7 bills to the cashier and receive one $11 bill as change. There are two different ways to make $120.
Your company just purchased office furniture (Asset class 00.11) for $100,000 and placed it in service an August 13, 2007. The cost basis for the furniture is $100,000, and it will be depreciated with the GDS using half-year convention.
The Fun-Land Amusement Park is a 40-acre fun park full of rides, shows, and shops. Fun-Land's marketing department segments its customer base into two parts: local patrons and tourists. Fun-Land assumes local patrons are more price sensitive than ..
A minor league baseball team is trying to predict ticket sales for the upcoming season and is considering changing ticket prices. a. The elasticity of ticket sales with respect to the size of the local population is estimated to be about 0.7.
VetPharm has historically produced and sold drugs for animals; however, one of its products developed for animal use has recently been approved for a similar use in humans. Market research has revealed that at the current per dose price.
Mark McGwire hit 70 home runs while playing for the St. Louis Cardinals. In 1999, McGwire hit 65 home runs. This decrease in marginal(home runs per season) product led to an associated decrease in McGwire's average(home runs per season) product.
The table below presents the PPC of Euphoria. Point Computers Food A 0 18 B 120 14 C 200 8 D 240 0 Calculate the opportunity costs of food in terms of computers for all the points in the above table. Does the law of increasing relative cost holds
The firm currently uses 50,000 workers to produce 200,000 units of output per day. The daily wage per worker is $80, and the price of the firm's output is $25. The cost of other variable inputs is $400,000 per day.
Your aunt has asked you to help her determine the date on which she must settle a debt. She borrowed $4500 on July 1, 2009, and $7500 on June 1, 2010, from the same lender. The interest rate is 3.24 percent compounded semiannually.
A steam boiler is required as part of the design of a new plant. The types of fuel that can be used to ignite the boiler are natural gas, fuel oil, and coal. The cost of installation including all required controls is $40,000 for natural gas.
Linear equations for the consumption and saving schedules take the general form: C = a + bY and S = - a + (1 - b)Y where C, S, and Y are consumption, saving, and national income, respectively. The constant a represents the vertical intercept.
The cost, demand and revenue functions have been determined By Delta and given below. The total amount of widgets sold in the market by all producers, including Delta's sales, is 238 units. Delta's current p..
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