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Pretend that your grandparents bought a house seventy years ago for 30,000. Even though no major improvements have ever been made to the house , you could sell it today for 500,00. It looks like the house has gained 470,00 of value.
Why is that probably not the case?
What is discounting in project evaluation? Explain the importance of discounting
Is the firm better off by selling this new intermediate version instead of the original scaled-down version?
Where Yp is potential GDP, Y is real GDP in billion of dollars and P is GDP deflator. By how much overall should the government expenditures change to achieve potential GDP level if MPC=0.8? Calculate the size of inflation/deflation associated with t..
Did the government spending increases and large budget deficits of 2008-2011 strengthen aggregate demand?
Discuss the macroeconomic supply of labor. Under which circumstances would you expect zero elasticity with regard to the real wage? In the real world this elasticity more often than not differs quite a bit from zero. Is this compatible with the theor..
One problem in using this function to study consumer surplus is that Q never reaches zero, no matter how high P is. Hence, suppose that the function holds only for P ? 10 and that Q = 0 for P > 10. How should you graph in part b be adjusted to fit th..
Currently Lotta £ 95,000 to invest. She faces the following choice: she can buy shares of AstraZeneca and Ericsson. If she invests in AstraZeneca she will lose £ 30,000 with probability 0.5, but with probability 0.4, she will win £ 35,000, while the ..
When transaction costs are low enough, efficient resource allocation will follow regardless of the particular assignment of property rights. When transaction costs are high enough, efficient resource allocation requires assigning property rights to t..
The CEO of a major automaker overheard one of its division managers makes the following statement regarding the firm’s production plans: ”In order to maximize profits, it is essential that we operate at the minimum point of our average total cost cur..
A firm's production function is qi = 4*Ki.2Li.4. The wage rate in this area is w = $15, and the cost of capital is r = .05. Find the firm's short run cost function, if Ki is fixed at $100,000. Now suppose that the price is not known. Derive the firm'..
Raisin bran and milk are complementary goods. A decrease in the price of raisins will:
One type of benefits involves giving workers discounts on the firm’s products. We noted that this type of system could reduce the firm’s costs by reducing some marketing expenses. Explain why offering such discounts (as opposed to increasing workers’..
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