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Listed here are several examples of bad, or at least questionable, decisions. Evaluate the decision maker's approach or logic. In which of the six decision steps might the decision maker have gone wrong? (a) Mr. and Mrs. A recently bought a house, the very first one they viewed. (b) Firm B has invested five years and $6 million in developing a new product. Even now, it is not clear whether the product can compete profitably in the market. Nonetheless, top management decides to commercialize it so that the development cost will not be wasted. (c) You are traveling on a highway with two traffic lanes in each direction. Usually traffic flows smoothly, but tonight traffic moving in your direction is backed up for half a mile. After crawling for 15 minutes, you reach the source of the tie-up: a mattress is lying on the road, blocking one lane. Like other motorists before you, you shrug and drive on. (d) The sedative thalidomide was withdrawn from drug markets in 1962 only after it was found to be the cause of over 8,000 birth defects worldwide. (An exception was the United States, where the use of thalidomide was severely restricted).
the classical model assumes that consumption depends positively on disposable income. now suppose that consumption also depends on the real interest rate. a) sketch the loanable
An owner can lease her building for $100,000 per year for the next three years. The explicit cost of maintaining the building is $35,000, and the implicit cost is $50,000. All reve
Q. Show the example on IS-curve? Figure We can explain this argument with the above figure. 1. Start by identifying R 1 and R 2 in lower graph. 2. Draw aggr
Q. Explain the Says Law? GDP, and Say's Law Aggregate supply Y S = f(L, K) in the classical model where L is concluded in the labor market while K is
The financial crisis that hit the United States first and then the world economy starting in fall 2007 meant that the future prospects of many firms looked gloomy at best for some
Store of value - Economic functions of money If you are a fisherman and have a temporary surplus of fish that you want to store for the future, storing the fish might not b
Government and Price-Determination can be understood as follows: The government might intervene in the market and mandate the maximum price (price ceiling) or the minimum price
why is international trade important for south Africa
What will happen to the shape of the money demand curve if the checking accounts bear interest? will it still slope down if the interest of the checking account is fixed while the
Following on papers by Pacala and Socolow,1 The Carbon Mitigation Initiative at Princeton University, http://cmi.princeton.edu/ has summarized carbon stabilization strategies at
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