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Macroeconomics

Present Worth for MARR

A firm wants to lease some land from you for 20 years and build a warehouse on it. As your payment for the lease, you will own the warehouse at the end of the 20 years. If the salvage value is estimated to be worth $20,000 then, what is the PW (Present Worth) assuming a MARR of 10%?

Gross Domestic Product.

Nominal GDP in a country was $8,759.9 billion in 2003 and $9,254.6 billion in 2004. The price index was 102.86 for 2003 and 104.37 for 2004. (a) What was the growth rate of nominal GDP between 2003 and 2004? (b) What was the inflation rate from 2003 to 2004? (c) What was the growth rate of real GDP between 2003 and 2004?

Price Ceilings and the marginal rate of substitution

1. What entity establishes a price ceiling and does it require government sanction for violators? Will it result in a surplus or a shortage? 2.Does the marginal rate of substitution increase or decrease as a point moves downward and to the right along a given indifference curve?

Calculating the Rate of Growth of Per Capita Real GDP

The annual rate of growth of real GDP in a developing nation is 0.3 percent. Initially, the countries' population was stable from year to year. Recently, however, a significant increase in the nation's birth rate has raised the annual rate of population growth to 0.5 percent. Answer the following questions: What was the ra

How Interest Rates Affect Long and Short Term Bond Prices

"The values of outstanding bonds change whenever the going rate of interest changes. In general, short-term interest rages are more volatile than long-term interest rates. Therefore, short-term bond prices are more sensitive to interest rate changes than are long-term bond prices" Is this statement true or false? Please explain

Underinvestment in Education

"Why is it likely that in a system of private education (i.e., a system in which individuals pay for their own education) there will be underinvestment in education? *Remember, education, likes yard work, provides additional social benefit to the society."

Total Profit Maximization - Dairy Farm Company

I'm having problems figuring out how to graph the attached problem. I know it must include product transformation curves, with total cost points, as well as total revenue lines. I'm just very confused about how to even get started. I need some guidance.

quantity theory of money

Suppose that the quantity of money in circulation is fixed but the income of velocity of money doubles. If the real GDP remains at its long run potential level, what happens to the equilibrium price level? Stays the same doubles triples quadruple

Finding the Multiplier

Given an increase in spending of $1,000, and a Marginal Propensity to Consume (MPC) of 80% (8/10), what would be the total increase in the GDP (as a result of the Multiplier?) What would the Multiplier be? Please show all work to help me clearly understand this problem.

Total Sunk Cost and the Total Opportunity Cost

Dave is employed by a company that currently pays him $65,000 per year. He owns a new car that he bought for cash of $32,500. Dave is thinking about returning to school to obtain a law degree. Tuition for the school he wants to attend is $28,000 per year, books average $1,350 per year, and room and board average $12,550 per year

Calculate the Real GDP in Each Year

Calculate the real GDP in each year, assuming that the nominal GDP was $559 billion in the base year, $577 billion in year one, and $605 billion in year two; and that the price index rose from 100 to 104.5 in the first year, and up to 108.3 in the second year. If the price index 20 years before the base year was 41.2, and the no

Forecasting

Among the advantages of the _____________ technique of forecasting are ease of calculation, relatively little requirement for analytical skills, and the ability to provide the analyst with information regarding the statistical significance of results and the size of statistical errors. least-squares trend analysis

Reinvestment under IRR

When two mutually exclusive projects are considered, the NPV calculations and the IRR calculations may, under certain circumstances, give conflicting recommendations as to which project to accept. The reason for this result is that in the NPV calculation, cash inflows are assumed to be reinvested at the cost of capital, while i

The internal rate of return of a project can be found

The internal rate of return of a project can be found a. by discounting all cash flows at the cost of capital. b. by averaging all cash inflows, and calculating the interest rate, which will make them equal to the average investment. c. by calculating the interest rate, which will equate the present value of

Monopolistically Competitive Firm

In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to a. continue its efforts to differentiate its product. b. raise its price. c. lower its price. d. do nothing, because it will inevitably experience a decline in profits.

Adverse Selection versus Moral Hazard Incentive Problem

WHich of the following is an example of an adverse selection problem and which is a moral hazard incentive problem? In each case, give one method that the restaurant might use to reduce the problem 1) A restaurant decided to offer an all-you-can-eat buffet that is sold for a fixed price. The restaurant discovers that the cust

perfectly competitive firm's short run cost

Assume a perfectly competitive firm's short run cost is TC = 100 + 160Q + 3Q2. If the market price is $196, what should it do? a. produce 5 units and continue operating b. produce 6 units and continue operating c. produce zero units (i.e., shut down) d. cannot be determined from the above information

Total Revenue Curve

When the slope of the total revenue curve is equal to the slope of the total cost curve monopoly profit is maximized marginal revenue equals marginal cost marginal cost curve intersects the total average cost curve. the total cost curve is at its minimum both a and b are correct

Goods and services

Which of the following is an example of how the question of "what goods and services to produce?" is answered by the command process? government subsidies for affordable housing laws regarding equal opportunity in employment government allowance for the deduction of interest payments on private mortgag

Costs, Outputs, and Profits

Instructions for Homework #5: A Perfect Competitive Firm: Costs, Outputs, and Profits The following graph represents a perfect competitive firm operating in the short-run. Please answer the following questions based on the information from the graph. Please show all your work to get full credits. a. Please determine the firm

Average fixed cost, MR=MC

1. Average fixed cost is: a.AC minus AVC b.TC divided by Q c.AVC minus MC d.TC minus TVC 2. Economists consider which of the following costs to be irrelevant to a short-run business decision? a.Opportunity cost b.Out of pocket cost c.Historical Cost d.Replacement Cost 3. When MR=MC a.Marginal profit is maximized