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Question 1:
Define the concept of opportunity cost in your own words. Given an example from your own life of the opportunity cost of a decision (do NOT use classroom examples). Explain why opportunity costs rather than "out of pocket" costs are the appropriate cost measure for social benefit cost analysis.
Question 2:
A foreign company plans to clear several dozen acres of ecologically valuable mangrove swamp in Vietnam for the creation of a shrimp aquaculture facility. This decision will create economic profits of $5000/year to the company (which hires substantial numbers of local villagers) after one year of construction but will cost $10,000 (paid upfront) to build. In addition, the loss of the mangrove habitat will reduce spawning and nursery habitat for valuable fish species - thus reducing the catch of fish by artisanal fishermen from 1000 tons to 750 tons per year (which has a market value, after costs, of $10/ton). Assume that these losses are experienced from the very first (construction) year onward and are permanent.
a. Assume that the discount rate is 5% (r=.05) and the evaluation horizon is 10 years from the present. Please neatly fill the blanks in the table below.
b. What is the net present value of this proposed project? If efficiency was the only objective for making the decision and we have fully accounted for all costs and benefits would you recommend the project go ahead or not?
c. Would the demonstration of a $.50 per family average willingness to pay for the preservation of the mangrove habitat on the part of middle to upper-class families in developed countries change your perception of the efficiency of this project?
What will happen to wage rates in country A and country B because of the migration of labor from country B to country A and what will happen to domestic output in country A and country B after immigration?
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The long-run aggregate supply curve is vertical at economy's potential output level. Why is the long-run aggregate supply curve situated at his level of output rather than below or above the potential output level?
The task is to interpret the following article in the light of your understanding of supply and demand. Where possible you should illustrate your discussion of the changing situations with demand and/or supply curves, indicating values where app..
What does price, average revenue and marginal revenue have in common and Firms can operate in one or more markets and not always on the same side of the market. General Motors is a buyer in the resource market and a seller in the automotive market.
Consider the competitive market served by many domestic and foreign firms. The domestic demand for such firm's product is Qd=500-1.5P. The supply function of domestic firms is Qsd=50+.5P, while that of the foreign firms is Qsf=250.
Show how to generate a supply and demand function from a information table that includes the supply and demand information for two different price levels.
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Discuss why a firm's long-run costs are minimized when it employs the mix of resources such that the ratio of all of the resources' marginal products to their wage rates are equalized. Employ a graph to illustrate.
Explain what the Durbin-Watson statistic from regression indicates and Plot the residuals against time and comment on whether there is a seasonal pattern.
How the Balance Sheet for Bank Z would look like after it loans out its Money to Mr. Chansa and suppose Mr. Chansa Deposit his Money into Bank-B, How would the T- Balance sheet look like for Bank- B
Traditionally, two% of the citizens of US live in a foreign nation because they are disenchanted with United States politices or social attitudes. In order to test if this prportion has raised since the September 11, 2001, terror attacks, United Stat..
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