Fundamentals of Economics

842 WordsJan 21, 20134 Pages
Chapter 1 (2 & 6 p. 27) 2. What is the maximum amount you would pay for an asset that generates an income of $150,000 at the end of each of five years if the opportunity cost of using funds is 9 percent? To find the maximum amount, we must determine the Present Value (PV) of the $150,000 over the 5 years. PV=(150000/1.09^1)+(150000/1.09^2)+(150000/1.09^3)+(150000/1.09^4)+ (150000/1.09^5) = $583,447.69 So, if costs exceeded $583,447.69, then the asset would not be worth the price. 6. Complete the following table and answer the accompanying questions. a. At what level of the control variable are net benefits maximized? 108 b. What is the relation between marginal benefit and marginal cost at this level of the…show more content…
While the manager is pleased to see this group of individuals doing well, he is concerned about the impact this will have on GR Dry Foods. What do you think is likely to happen to the price of the products GR Dry Foods sells? Why? The increase in salary will cause a consumer-producer rivalry where the consumer has the additional income to purchase their goods elsewhere. Producers may have to competitively lower their prices to maintain their customer base. This shows that their good is
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