MACROECONOMICS (LOOSELEAF)-PACKAGE
13th Edition
ISBN: 9781337492317
Author: Baumol
Publisher: CENGAGE L
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Chapter 8, Problem 2TY
To determine
To analyze:The statement among the given statementsconsidered as investment.
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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 $1.5 million. If it would cost $2 million to finish development and make the product, you
Compile a list of consumption behaviours that you consider unethical. For each behaviour listed, explain why you view it as wrong. Also, for each behaviour listed, discuss the possible reason a person engaging in that practice may use to justify it
Refer to the article below:
FRONT PAGE
College Tuition Up Again
College gets more expensive again. In-state tuition at public four-year colleges
rose 2.3 percent in 2019-2020, to an average of $10,440 per year. Out-of-state
students paid an average of $26,820 to attend.
Private four-year colleges also saw even bigger price hikes: 3.4 percent-to an
average of $36,880. Tuition prices have been outpacing general inflation rates for
many years.
Source: The College Board.
If tuition keeps increasing at the same rate as in 2019-2020, how much will it cost to complete a degree at a private college in four
years (2019-2023)?
Hint: Future value = Present value x (1 + Growth in prices)
Next year's tuition = This year's tuition x (1 + Growth in prices)
Instructions: Round your responses to the nearest whole dollar.
Tuition freshman year (2019-2020)
Tuition sophomore year (2020-2021)
Tuition junior year (2021-2022)
Tuition senior year (2022-2023)
Total tuition
$
$
$
$
$
Chapter 8 Solutions
MACROECONOMICS (LOOSELEAF)-PACKAGE
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- Suppose that you are a cattle rancher. You are deciding when to take your cattle to market to sell. You currently have a herd of 100 cattle. Each cow currently weighs 650 pounds and is gaining 50 pounds per month. Your feed costs are $40 per month per cow. Cattle prices are currently $8 per pound, but have been falling at the rate of $0.10 per month. If you are maximizing profits, how many months from now should you sell your cows?arrow_forwardScenario 1: Suppose you are a salesperson is a high end clothing store known for its personal service. You receive a salary plus a commission equal to 10% of the sales/revenues that you sell. The manager of your store informs you that prices of the clothing in your store will increase by 10%. (1) Assuming everything else remains the same, would you be happy or sad about the price increase? Explain why or why not. Scenario 2: Suppose you are a salesperson at Macy’s, a department store. You receive a salary plus a commission equal to 10% of the sales/revenues that you sell. Macy’s informs you that price of the clothing in your store will increase by 10%. (2) Assuming everything else remains the same, would you be happy or sad about the price increase? Explain why or why not.arrow_forwardConsider a new business that invests $20 million into a plant to manufacture loaves of bread. The market for bread is say around 100 million loaves and the new firm expects that it will be able to obtain a market share of around 5%. At that level of production, the total cost of production is $10 million. Let us say that it targets a 20% return on its investment. What should the price of a loaf of bread be? Use the principle of target rate of return pricing. If the mark-up rate is 10% what will the full-cost price be?arrow_forward
- Refer to the article below: FRONT PAGE College Tuition Up Again College gets more expensive-again. In-state tuition at public four-year colleges rose 2.3 percent in 2019-2020, to an average of $10,440 per year. Out-of-state students paid an average of $26,820 to attend. Private four-year colleges also saw even bigger price hikes: 3.4 percent-to an average of $36,880. Tuition prices have been outpacing general inflation rates for many years. Source: The College Board. If tuition keeps increasing at the same rate as in 2019-2020, how much will it cost to complete a degree at a private college in four years (2019-2023)? Hint: Future value = Present value x (1 + Growth in prices) Next year's tuition = This year's tuition x (1 + Growth in prices) Instructions: Round your responses to the nearest whole dollar. Tuition freshman year (2019-2020) Tuition sophomore year (2020-2021) Tuition junior year (2021-2022) Tuition senior year (2022-2023) Total tuition $ $ $ tAarrow_forwardIdentify the type of specialized investment that each of the following situations requires. a. You hire an employee to operate a machine that only your company uses. b. An aerosol canning company designs a filling line that can be used only for a particular firm’s product. c. A company builds a manufacturing facility across the street from its primary buyer.arrow_forwardThe MC for the Hydration Power Drink is $1.00. The MC for the smoothie is $4.00.Using the chart and the information provided, what is the contribution margin at each price for each product? Hydration High Price contribution margin is Hydration Low Price contribution margin is Smoothie High Price contribution margin is Smoothie Low Price contribution margin isarrow_forward
- Firm X, a leading manufacturer of rubber tires in country A, caters to almost one-third of the domestic tire market. The country was hit by a recession last year that caused the national output growth to be negative. Simon Reeds, the CEO of firm X, feels that these fluctuations in the business environment are short-lived and expects the economy to recover very soon. In spite of the recession, Simon feels that the firm can actually invest in expanding its facilities as it has sufficient cash flows to continue its operation during the crisis period. The firm's marketing head, Sandra Jones, counters this by saying that the firm is already losing sales due to the recession and they should not increase costs further by making large-scale investments in the present climate. Which of the following, if true, would support the CEO's claim? A. The government recently announced a plan to offer incentives to buyers in the car and household appliances market. B.…arrow_forwardFirm X, a leading manufacturer of rubber tires in country A, caters to almost one-third of the domestic tire market. The country was hit by a recession last year that caused the national output growth to be negative. Simon Reeds, the CEO of firm X, feels that these fluctuations in the business environment are short-lived and expects the economy to recover very soon. In spite of the recession, Simon feels that the firm can actually invest in expanding its facilities as it has sufficient cash flows to continue its operation during the crisis period. The firm's marketing head, Sandra Jones, counters this by saying that the firm is already losing sales due to the recession and they should not increase costs further by making large-scale investments in the present climate. Which of the following, if true, would support the marketing head's claim? A. In the previous recession, a leading player in the hospitality sector had expanded its facilities but was unable…arrow_forwardQuestion 1 Tom is trying to figure out how to supplement his student bursary of £200 per week. He is considering a part-time job at a restaurant. The wage is £8 per hour. His utility function is U(C, L) = C ·L where C is his consumption measured in £ per week and L his leisure, measured in hours per week. The amount of leisure time that he has left after allowing for necessary academic activities is 50 hours a week. 1. Write out Tom's budget constraint and calculate the maximum value (i.e. he works the maximum time available) and minimum value? 2. Using your results from part 1, draw Tom's budget set (horizontal axis: leisure and vertical axis: consumption). 3. Let Y = student bursary, T = total amount of leisure time and w =wage. Set up the maximisation problem and calculate optimal consumption demand and leisure as a function of his student bursary and wage. 4. For the values given in the question, work out the value for optimal leisure hours and consumption spending L" and C*. 5.…arrow_forward
- Because of the housing bubble, many houses are now selling for much less than their selling price just two to three years ago. There is evidence that homeowners with virtually identical houses tend to ask for more if they paid more for the house. What fallacy are they making?arrow_forwardType out the correct answer ASAP with proper explanation of it . Suppose that in your first year of college you spend $33,600.00 more than you earn. In your second year, your expenses increase a bit, leading you to spend $34,300.00 more than you earn. This gap goes to $35,030.00 in your third year of college, then falls a bit to $35,030.00 in your fourth and final year. What is your deficit in your third year of college? $ $ How much debt do you have that year? $ $ Will give you thumbs up only for the correct answer. Thank you.arrow_forwardExample: U(X,Y) = (XY)-5, Px =2, Px = 1, M = 10 • What will be the consumer's optimal consumption? ●arrow_forward
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