c) Using the same logic as (b) So, output increases by about 3 percent. The change in the real rental price of capital is: The real rental price falls by 6.5% because there are diminishing returns to capital. The change in the real wage is: So, the real wage increases by 2.9% because the added capital increases the marginal productivity of the existing workers. (Notice that the wage and output have both increased by the same amount, leaving the labour share unchanged—a feature of the Cobb-Douglas production function.) d) Using the same
q1= (100-(10-3))/3=31 q2= 30 Q=31+30=61 Market Price=100-30-31=39 Firm’s one profit= 31*39-31*7=992 Firm’s two profit=30*39-30*10=870 c. Compare consumer surplus from parts a and b. Do consumers fare better with or without the subsidy? (Remember that consumer surplus is calculated from market quantity and market price.) The consumer surplus is bigger with subsidiary because they get more quantity with lower price while without subsidiary consumer’s surplus become smaller as they get less quantity with higher price. Chapter 11 6.
a rise in the equilibrium output. a fall in the equilibrium output. Question 10 Let the marginal product of capital (MPK ) be 6; the marginal product of labor (MPL) be 2; the price of labor is given by $10. What will be the price of capital such that the isocost and the isoquant are tangent to each other? $30 $3 $60 $6 Question 11 Which of the following is a property of an isoquant?
This ensures us to get the reinvestment return from the cash flow on the WACC without worrying about the scale problem. I find that developing the new technologies in the house has higher MIRR than purchasing; the two rates are 17.40% and 15.40% respectively. 2. NPV, the sum of the present value of the cash outflows and inflows can measure the expected change in wealth from undertaking the project. The NPV for purchasing the technologies is 94.71 million and the NPV for developing the technologies is 127.24 million.
(p. 204) The pay-mix component in which benefits is likely to be largest is ______________. A. work-life balance b. security or commitment c. performance driven d. market watch 10. (p. 207) Which of the following is not a consequence of level of competitiveness of total compensation? a. increase probability of union-free status B. increase organization profitability c. reduce voluntary turnover
QUESTIONS 1. Table 1 contains the complete cash flow analysis based on GP Manufacturing’s basic information. Explain the inputs into 1) the net initial investment outlay at year 0, 2) the depreciation tax savings in each year of the project’s economic life, and 3) the project’s incremental cash flows? 2. What is the project’s NPV?
If the cash is higher than the net income, the company’s net income is of high quality. If the cash is lower than the net income, the company’s net income is not turning into cash and a red flag should go up. Having more cash than the net income can mean shareholders will receive an increase in dividends can reduce debt, buy back stocks, or purchase another company. According to, the cash flow statement Home Depot, Incorporated is similar to fiscal year 2007. In fiscal year 2008, Home Depot Incorporated generated $5.5 billion of cash flow from operations and used $2.0 billion to repay short-term debt and other obligations plus $1.8 billion for capital expenditures and $1.5 billion in dividends.
Economic growth involves the rise of output in an economy by using gross domestic product (GDP) to measure ‘the total value of everything produced in an economy in a time period (…)’ (Fribbance, 2009, p. 21) Research on happiness outlines the limitations and complexity of people´s well-being on a global basis. 2. Scientific perspectives on wealth and happiness The claim that there are connections between economic growth, wealth, health and happiness has led scientists to conduct research on this topic. There are various findings either supporting or opposing the claim that one factor has an impact on the other. 2.1 Supporters of the more wealth = more well-being claim Indur Goklany: The improving state of the world: Why We Are Living Longer, Healthier, More Comfortable Lives on a Cleaner Planet Stevenson and Wolfers: Economic Growth and Subjective Well-Being Goklany points out that people live in a better place now
Exploring the Keynesian framework, Harrod-Dommar model points out some dynamics of growth. For instance, to determine equilibrium growth rate in the economy, the balance between supply and demand for a country’s output should be maintained. On supply side, saving is a function of the level of GDP. Investment is an important component of the demand for the output of an economy as well as the increase in capital stock. Therefore, the equilibrium rate of growth is given by matching proportionate change in output with the ratio of savings-output to that of capital-output.
The relationship between marginal revenue and total revenue is the change in total revenue with respect to the variable change in quantity. Marginal revenue = demand MR = d(TR)/dQ, where Q is quantity. For each additional unit of output sold total revenue increases but only by the amount equal to the marginal price of the output unit. • As we increase the number of units sold which generate a positive marginal revenue, the total revenue increases (The total revenue increases when marginal revenue is positive) • When marginal revenue is zero the total revenue does not change and the total revenue is maximum (When MR = 0, TR Δ = 0) B. Define marginal cost Marginal cost is the total cost to produce an additional unit of goods sold.