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Macroeconomics

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

Decreasing Returns to Scale in the Long Run

In the long run, a firm is said to be experiencing decreasing returns to scale if a 10 percent increase in inputs results in: an increase in output from 100 to 110. a decrease in output from 100 to 90. an increase in output from 100 to 105. a decrease in output from 100 to 85.

Function of a Perfect Substitution of Two Inputs

The perfect substitution of two inputs implies that two inputs can be substituted at a ratio of 1 to 1. one input can be substituted for another up to some point. two inputs can be substituted at some constant ratio. one input can be substituted for another.

Defining Business Risk

____________ risk involves variation in returns due to the ups and downs of the economy, the industry and the firm. structural fluctuational business financial

Monopolist in publishing a textbook on Hong Kong economy.

3. SAR Publisher is a monopolist in publishing a textbook on Hong Kong economy. Besides the Hong Kong market, SAR Publisher also sells this textbook in the US. Suppose SAR Publisher can produce this textbook at a constant marginal cost of $20 per copy and the demand curves for the two markets are given by: QUS = 48, 000 - 600PU