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Suppose you own and operate a coffee shop in your hometown. Each year, you receive revenue of $200,000 from coffee sales, and it costs you $100,000 to obtain your raw materials. In addition, you pay $20,000 for electricity, taxes, and other expenses per year. Instead of running the coffee shop, you could become an accountant and receive a yearly salary of $40,000. A clothing retailer, interested in expanding, has also offered to rent your shop space from you for $50,000 per year. How do you explain to your friends that despite making a profit, it is too costly for you to continue running your shop?
Raytheon is producing an air-to-air missile. The cost of the 500th missile is estimated to be $300,000 and the learning curve is 88%. What is the estimated cost of the 600th missile? What is the total cost of the lot of missiles from unit 601 to unit..
Increase in Government expenditure makes increase in real GDP via multiplier process. If the effective multiplier for fiscal policy is 2, how much change in government purchases would be required to close a 500 billion negative output gap, other thin..
Do multinational Company exploit host countries that covet technologies and entrepreneurial skills that the multinationals provide?
Why might firms consider issuing stock in foreign countries? Why might U.S. businesses look to issue more stock in Europe since the adoption of the euro (implemented in 1999)?
Consider the problem of carbon dioxide emissions. We will abstract from the complexity of the problem slightly, assuming there are polluters and consumers in two regions, the OECD (O) and the rest of the world (R). Proposal A involves the polluters p..
A forty-year annuity-immediate makes monthly payments. During the first year the monthly payments are $100 each. The payments within each year are level; however, the monthly payments in each of the years two through forty are 4% higher than those in..
Which of the following are reasons to expect that in a perfectly competitive market economy with no government intervention in the market for education there is an externality associated with education that makes people get socially inefficient amoun..
Define monopolistic competition. How is monopolistic competition similar to monopoly? How is monopolistic competition similar to perfect competition?
Discuss the various ways inflation can hinder economic activity. What are some strategies you might use in your life to deal with rising inflation? How might these strategies change if we experienced deflation?
Why could you say that supply-side economics is really more about after-tax wages and after-tax returns on investment than is about tax rates?
For the next three questions we will consider Sante Bank, which has the following (partial) list of accounts on its balance sheet:
The economy is made up of C and I and is currently at full employment. If consumption is $5 trillion while savings is $1 trillion, what is present investment according to classical economists.
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