Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Chapter 17, Problem 17.6P
To determine
To find:
Calculation of present discounted value of premium costs.
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Suppose Jay has been experiencing back pain and that there are two options for back pain:
Treatment Regimen
Total Cost
Pain Reduction
Do nothing
$0
0 units
Cortisone injections
$600
30 units
Calculate the ICER between cortisone injections and doing nothing.
Jay says he is willing to pay $10 for a per unit of pain reduction. Should he choose cortisone injections?
Another treatment is discovered. It costs $700 and reduces pain by 25 units. Should he choose the new treatment?
Suppose that you are trying to make a decision regarding the purchase of a new machine for the plant that you are working on. You have three criteria to consider. First of all, in these hard times, the price of the machine is very important for you. On the other hand, the throughput rate is also very important for you since you are anticipating higher demand in the future and you should have enough production to satisfy the customer demand. Finally, energy consumption is an issue that your company is sensitive to not only for the cost issues but also green production seems to be very important particularly for your customers. You have decided to adopt the additive utility function for the overall utility from these three criteria. Thus, the next thing for you is to determine the relative weights of the criteria. Suppose you used Swing Weighting and obtained the following table as the result of the process. What is the weight of the price?
Holloman Hops has budgeted $300,000 per year to pay for labor over the next 5 years. If the company expects the cost of labor to increase by $10,000 each year, and the interest rate is 10%, what is the expected cost of the labor in the first year?
Chapter 17 Solutions
Microeconomic Theory
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