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Suppose the publisher offers you $80,000 after the first draft. If interest rates are 5%, what is the value today of the publisher's future payments?
Many state lotteries allow winners to choose a single payment instead of a series of annual payments. Comment on the generosity of the lottery commissioner.
How much would your payment fall if you paid $10,000 down at the time of purchase?
Suppose government asks for $6000 each year for all of eternity. If interest rates currently sit at 4%, what is the present value of the payments you will make?
Calculate the present value of each plan's payments if interest rates are 10%. Should you choose Plan A or Plan B?
Calculate the value of each of these bonds today if interest rates are 4%. Suppose interest rates rise to 8%. What will happen to the price of each bond?
Calculate the net present value of Marian's investment in floriculture if interest rates are 10%.
Calculate your annual fuel expenditures for the Prius and the Oldsmobuick. Again, carry out your cost calculations for only five years.
Based on your answer to problem above, find the marginal revenue curve faced by Grenada. Equate marginal revenue with marginal cost to find Grenada's output.
Find the Cournot equilibrium output and price. What happens to the Cournot price and quantity as a result of the increase in demand?
How much should Firm 1 be willing to pay if such an investment can guarantee that Firm 2 will not be able to acquire it?
Suppose that instead of merging, Bill considers buying Ted's operation for cash. How much should Bill be willing to offer Ted to purchase his emu ranch?
Derive reaction curves for Firm 1, Firm 2, and Firm 3. How would the price, quantity, and industry profit change if one of the firms were to exit the industry?
What happens to the output of each firm as a result? What happens to the market price of prokrypton-B? What happens to the profit of each firm?
Sydney wishes to produce the profitmaximizing quantity of baby platypus. Write an equation for the residual demand faced by Sydney.
Graph the market demand curve. What would be the prevailing price and quantity if this industry were controlled by a monopolist?
Where will customers purchase red beans and rice? Where will they not purchase them?
If there are lots of pumpkin growers in town so that the pumpkin industry is competitive, how many pumpkins will be sold, and what price will they sell for?
How much profit will each producer earn? What will be the total profit of the cartel? Is Pierre likely to agree not to produce any soufflés?
Calculate Pierre's profit. How much did he gain by cheating? Calculate Gaston's profit. How much did Pierre's cheating cost him?
What are the characteristics of a monopolistically competitive firm? Why do firms in monopolistic competition not reach the perfectly competitive equilibrium?
What does the residual demand curve tell us about a firm's output in Cournot competition? What causes the first-mover advantage in Stackelberg competition?
Solve for the price AT&T should charge to maximize profit. Solve for the price Verizon should charge to maximize its profit.
Suppose that the cable company begins to offer slightly faster service than the telephone company, which alters demands for the two products.
What is the economic order quantity? What is the economic order quantity?