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Question: STRENLAR, PART III
Consider once again Fred Wallace's decision in the Strenlar case study at the end of Chapter 4. What if Fred is risk-averse? Assume that Fred's attitude toward risk in this case can be adequately modeled using an exponential utility function in which the utility is calculated for net present value. Thus,
U(NPV) = 1 - e-NVP/R
1. Check the sensitivity of Fred's decision to his risk tolerance, R. What is the critical R value for which his optimal decision changes? What advice can you give to Fred?
The Metal Company produces brass fittings for one cent a piece. Their production function is q = 500 . E^2 . K^3 , where q, E, and K are the numbers of fittings, workers, and machines, respectively. Calculate The long-run optimal amounts of workers..
the problem of asymmetric information is that ltbrgta niether health care buyer nor providers are well-informed ltbrgtb
Beginning with (a) the distinctions between general purpose vs. special purpose money, and an explanation of what transpires in market exchange using currency, (b) define barter, in terms of transaction and opportunity costs,
What is the optimum and sustainable price ceiling the government could impose?
Parties to a contract should have and understanding of what they are undertaking—a meeting of the minds. Provide an example of two parties who have reached such a clear understanding.
If you are a manufacturer do you necessarily want the gray market to cease to exist? Why or why not? How about if you are a franchised dealer?
Television channel operating profits vary from as high 45-55% at MTV and Nickelodeon down to 12-18 at NBC and ABC. Provide a Porter Five Forces analysis of each type of network.
What level of output will these firms produce in the short run and are these firms operating under perfect or imperfect competition?
suppose that there are two products clothing and soda. both brazil and the united states produce each product. brazil
A manufacturing rm spends $500,000 annually for a required safety inspection procedure on its production lines. A new monitoring technology would enable the company to eliminate the need for such inspection.
What are the definitions of marginal revenue? What happens when government institutes price floors above the equilibrium price (e.g., minimum wages and other 'high' minimum prices)?
Describe the profit maximizing (or loss minimizing) output for this firm. Explain why or why not there an accounting profit? Explain why a firm in pure competition is considered to be a "price taker."
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