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Homework Assignments Problems & Applications Chapter 1 Homework 4. You win $100 in a basketball pool. You have a choice between spending the money now or putting it away for a year in a bank account that pays 5% interest. What is the opportunity cost of spending the $100 now? 5. The company that you manage has invested $5 million in developing a new product, but the product is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $3 million. If it would cost $1 million to finish development and make the product, should you go ahead and do so? What is the most that you should pay to complete the development? Chapter 2 …show more content…

9. Suppose a technological advance reduces the cost of making computers. a. Draw a supply and demand diagram to show what happens to price, quantity, consumer surplus, and producer surplus in the market for computers. b. Computers and adding machines are substitutes. Use a supply and demand diagram to show what happens to price, quantity, consumer surplus, and producer surplus in the market for adding machines. Chapter 8 Homework 7. The late Daniel Patrick Moynihan, once senator from New York, introduced a bill that would levy a 10, 000.00% tax on certain hollow tipped bullets a. Do you expect that this tax would raise much revenue? Why or why not? b. Even if the tax would raise no revenue, why might the senator have proposed it? 11. Hotel rooms in Small-town USA goal for $100, and 1,000 rooms are rented on a typical day. a. To raise revenue, the mayor decides to charge hotels a tax of $10 per rented room. After the taxes imposed, the going rate for hotel rooms rises to $108, and the number of rooms rented falls to 900. Calculate the amount of revenue this tax raises for the town in the dead weight loss of the tax ( hint: the area of a triangle is one half X base X height.) Chapter 9 Homework 1. Mexico represents a small part of the world orange market. a. Draw a diagram depicting the equilibrium in the Mexican orange market without international trade. Identify the

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