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Consider two bonds. Each has a face value of $100 and matures in one year. One has a zero coupon payment, and the other pays $10 per year.
A. Explain how the two bonds differ
B. Calculate the price of each bond if the interest rate is 3%
C. Which bond has a higher price? And why
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Good X is produced in a competitive market using input A. Explain what would happen to the supply of good X in each of the following situations. The price of input A decreases.
There are very examples of perfect competition. Yet in the study of industrial organization, significant discussion is focused on this type of market. Explain why.
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(a) Explain the meaning of efficiency in economics and use a sketch diagram to illustrate its attainment by reference to the Production Possibility Curve. (b) Refer to the
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2.2 "Our business model works even if all internet software is free ....... We are still selling operating systems. What does Netscape''s business model look like? Not very good."
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