EBK MACROECONOMICS (FOURTH EDITION)
4th Edition
ISBN: 9780393616125
Author: Jones
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 9E
(a)
To determine
The basic arbitrage equation.
(b)
To determine
Rewrite Equation (1) to solve the price of the idea.
(c)
To determine
The economic interpretation of the above result.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
You have just graduated from the MBA program of a large university, and one of your favorite courses was “Today’s Entrepreneurs.” In fact, you enjoyed it so much you have decided you want to “be your own boss.” While you were in the master’s program, your grandfather died and left you $1 million to do with as you please. You are not an inventor, and you do not have a trade skill that you can market; however, you have decided that you would like to purchase at least one established franchise in the fast-food area, maybe two(if profitable). The problem is that you have never been one to stay with any project for too long, so you figure that your time frame is 3 years. After 3 years you will go on tosomething else.
You have narrowed your selection down to two choices: (1) Franchise L, Lisa’s Soups, Salads, & Stuff, and (2) Franchise S, Sam’s Fabulous Fried Chicken. The net cash flows shown below include the price you would receive for selling the franchise in Year 3 and the forecast…
The Netherlands abolished its patent
system in 1869. What did subsequent
innovation in the Netherlands teach us
about patents?
Since more low-income households
started inventing, patents must be an
exclusive institution
Since fewer women were inventing,
patents are an inclusive institution
Patents aren't necessary for innovation,
but they can affect the types of innovation
we get.
Without patents, societies become
stagnant
International Businesses or Multinational companies came to the scene in the latter half of the 19th Century when they spread their activities into the global economy. They were few in 1945 but their populations grew to over 9000 by 1973 and to 30000 by 1990 at a global level. In 2011, the United Nations Conference on Trade and Development (UNCTAD 2011) observed that there were over 100,000 Multinational companies controlling about 900,000 foreign affiliates. Despite this growth, international businesses in some cases use strict scrutiny of countries which they need to operate in, dependent on whether a country practices democracy or totalitarianism. Some companies find it easier to run their companies in countries practicing democracy and allergy that it is difficult to run it in totalitarian based countries and others endure economies to still operate in both types of economies. Even Nobel prize winner Amartya Sen argues that economic development is a process where countries expand…
Chapter 17 Solutions
EBK MACROECONOMICS (FOURTH EDITION)
Knowledge Booster
Similar questions
- Back to Assignment Attempts: Keep the Highest: 1/4 3. The relationship between marginal and average costs Consider the following scenario to understand the relationship between marginal and average values. Suppose Edison is a professional basketball player, and his game log for free throws can be summarized in the following table. Fill in the columns with Edison's free-throw percentage for each game and his overall free-throw average after each game. Game Game Result Total Game Free-Throw Percentage Average Free-Throw Percentage 3/3 3/3 100 100 3/5 6/8 80 3 2/8 8/16 4 2/4 10/20 5/5 15/25 On the following graph, use the orange points (square symbol) to plot Edison's free-throw percentage for each game individually, and use the green points (triangle symbol) to plot his overall average free-throw percentage after each game. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. 100 Tarrow_forwardDuring a coffee-room debate among several young MBAs who had recently graduated, one of the young executives flatly stated, “The most this company can lose on its Brazilian division is the amount it has invested (its fixed costs).” Not everyone agreed with this statement. In what sense is this statement correct? Under what circumstances could it be false? Explain.arrow_forwardQuestion In many countries, the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services. (In some cases these firms are "nationalized" and the government actually buys or confiscates firms that operate in monopoly markets). Explain TWO advantages and TWO disadvantages of such an approach. Evaluate the view that having a business objective of increased economies of scale is always desirable.arrow_forward
- (This is a single question with five parts to the answer. I would appreciate help with all five parts if possible. Image screenshot of the original question with the formulas more easily readable than can be identified here is attached) Tech firms produce goods and services from labor and energy. The total cost in dollars to produce y amount of goods and services for each firm j is cj(yj) = yi2. There are 100 identical tech firms which all behave competitively. What is the individual supply of technological goods and services? What is the market supply of technological goods and services? Suppose the demand curve for these goods is D(p)=200-50p. What is the equilibrium price and quantity sold? How much is the total surplus of this economy? Now suppose that the industry makes a one-time investment for $K amount of dollars to innovate in a new technology of production that allows every firm to reduce its cost of production to a 1/4 fraction of the previous cost. What is the new total…arrow_forwardQuestion: Who among the following economists introduced the concept of the "invisible hand" to describe the self-regulating behavior of the marketplace? A) Adam SmithB) John Stuart MillC) Friedrich HayekD) Paul Samuelson Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.arrow_forwardInnovation has been frequently described in formal mathematical models as a linear process. Do you agree with this view? Articulate your answer by considering the major properties of the innovation process as discussed during the ECONOMIC modulearrow_forward
- Suppose the return and cost of entrepreneurship curves are described by the following equations (with numbers measured in the thousands): R=1,100−100N C=100+150N, where R=returns to entrepreneurship, C=cost of entrepreneurship, and N=number of entrepreneurs. The equilibrium number of entrepreneurs is N=...... thousand. (Round your response to two decimal places.) The equilibrium returns to entrepreneurship is R=$..... thousand. (Round your response to two decimal places.) The government enacts a license fee of $100 thousand to file the paperwork necessary to start a firm. The new equilibrium number of entrepreneurs is N=....... thousand. (Round your response to two decimal places.) The new equilibrium returns to entrepreneurship is R=$...... thousand. (Round your response to two decimal places.)arrow_forwardIntroduction to Calculus in Economics (continued): In the previous Problem Set question, we started looking at the cost function C (x), the cost of a firm producing z items. An important microeconomics concept is the marginal cost, defined in (non-mathematical introductory) economics as the cost of producing one additional item. If the current production level is z items with cost C (x), then the cost of computing h additionial items is C (+h). The average cost of those h items (C(r+h)-C(x)) is As we analyze the cost of just the last item produced, this can be made into a mathematical model by taking the limit as h → 0, h i.e. the derivative C' (x). Use this function in the model below for the Marginal Cost function MC (x). Problem Set question: The cost, in dollars, of producing z units of a certain item is given by C (2) = 0.043 – 20x+ 350. (a) Find the marginal cost function. a ab Va a sin (a) MC (x) = E (b) Find the marginal cost when 60 units of the item are produced. The marginal…arrow_forwardRomilo produces 250 different varieties of potatoes sourced from nearby villages, suggesting he likely lives in: Maine China Ireland Peru, or maybe Chile All of the following are reasons that foreign countries and corporations engage in long-term leases of land or outright land purchases in other countries EXCEPT: These countries and corporations may be concerned about the long-term food security of their home population These countries and corporations have a stated goal of promoting neo-colonialism These countries and corporations may be pursuing a strategy to ensure energy security These countries and corporations may be interested in low prices for labor and land CITES seeks to preserve the existence of endangered species. This existence value is a __________. CITES is effective, but very narrowly focused on __________. public good, fish private good, rhinos…arrow_forward
- Introduction to Calculus in Economics (continued): In the previous Problem Set question, we started looking at the cost function C (x), the cost of a firm producing z items. An important microeconomics concept is the marginal cost, defined in (non-mathematical introductory) economics as the cost of producing one additional item. If the current production level is z items with cost C (x), then the cost of computing h additionial items is C (x+ h). The average cost of those h items (C(x+h)-C(x)) is As we analyze the cost of just the last item produced, this can be made into a mathematical model by taking the limit as h → 0, h i.e. the derivative C' (x). Use this function in the model below for the Marginal Cost function MC (x). Problem Set question: The cost, in dollars, of producing a units of a certain item is given by C (2) = 0.04a3 – 20z+ 350. (a) Find the marginal cost function. a ab b |a| sin (a) a MC (z) = | (b) Find the marginal cost when 60 units of the item are produced. The…arrow_forwardIntroduction to Calculus in Economics: Calculus is a powerful tool used in economics. One of the initial applications areas is the study of a firm, a topic in microeconomics. An important function is the cost function function C(x), the cost of producing items (of whatever they are selling). This question deals with just the cost function C'(x). Problem Set question: The cost, in dollars, of producing a units of a certain item is given by C(x) = 10x10√x - 8. Find the production level that minimizes the average cost per unit. The number of units that minimizes the average cost is Numberarrow_forwardCalculus is a powerful tool used in economics. One of the initial applications areas is the study of a firm, a topic in microeconomics. An important function is the cost function function C(x), the cost of producing x items (of whatever they are selling). This question deals with just the cost function C(x). Problem Set question: The cost, in dollars, of producing x units of a certain item is given by C(x)=5x−4x−1−−−−√. Find the production level that minimizes the average cost per unit. The number of units that minimizes the average cost is .arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you