ECNS 201 PRINTOUT
8th Edition
ISBN: 9781337096553
Author: Mankiw
Publisher: CENGAGE L
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Chapter 1, Problem 5PA
To determine
Applying the concept: Rational people think at the margin.
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The company that you manage has invested
$5 million in developing a new product, but the
development 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 development?
Your firm has a new strategy that will make its established product obsolete. However, it will take a year before you are ready to implement the new strategy. If you announce your plan in advance, profits will disappear because many customers will delay purchase until the new product is released. If you don't announce the new plan, customers will continue to buy the established product, but others may end up not doing business with you in the long run. What would you decide to do?
Buying and selling textbooks are two separate decisions made at the margin. Textbooks create value both when they are bought and
when they are sold.
Think about your decision to buy the textbook for this course. You paid $225 for the book, but you would have been willing to pay
$500 to use the book for the semester. Suppose that at the end of the semester you could keep your textbook or sell it back to the
bookstore. Once you have completed the course, the book is worth only $50 to you. The bookstore will pay you 50% of the original
$225.
How much total value have you gained? $
Chapter 1 Solutions
ECNS 201 PRINTOUT
Ch. 1.1 - Prob. 1QQCh. 1.2 - Prob. 2QQCh. 1.3 - Prob. 3QQCh. 1 - Prob. 1CQQCh. 1 - Prob. 2CQQCh. 1 - Prob. 3CQQCh. 1 - Prob. 4CQQCh. 1 - Prob. 5CQQCh. 1 - Prob. 6CQQCh. 1 - Prob. 1QR
Ch. 1 - Prob. 2QRCh. 1 - Prob. 3QRCh. 1 - Prob. 4QRCh. 1 - Prob. 5QRCh. 1 - Prob. 6QRCh. 1 - Prob. 7QRCh. 1 - Prob. 8QRCh. 1 - Prob. 9QRCh. 1 - Prob. 10QRCh. 1 - Prob. 1PACh. 1 - Prob. 2PACh. 1 - Prob. 3PACh. 1 - Prob. 4PACh. 1 - Prob. 5PACh. 1 - Prob. 6PACh. 1 - Prob. 7PACh. 1 - Prob. 8PACh. 1 - Prob. 9PACh. 1 - Prob. 10PACh. 1 - Prob. 11PA
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