4.) A firm contemplating an advertising campaign that promises to yield $120 one year from now for $100 spent now. Explain why the firm should not undertake the advertising campaign. Because of the Time Value of Money; the $120 might have a Present Value that is lower than the $100 spent now‚ therefore the campaign would have a negative Net Present Value and should not be undertaken. 5.) Determine which of two investment projects a manager should choose if the discount rate of the firm is 10
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Economics Over the last couple of weeks‚ there has been a lot of valuable information about what economics is and how it works through the presentations and the guest speakers.. Economics is basically the understanding of how different economies function. Economics is the study of how to best allocate scarce resources among competing uses. Scarcity in the economy is the main problem. There are not enough resources to keep up with the demand for them. Within the discipline of economics‚ there
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CHAPTER 9 Three conditions for a market to be perfectly competitive? Many buyers and sellers‚ with all firms selling identical products‚ and no barriers to new firms entering the market. In perfectly competitive markets‚ prices are determined by The interaction of market demand and supply because firms and consumers are price takers. Price taker Buyer or seller that is unable to affect the market price. A buyer or seller that takes the market price as given When are firms likely to be
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transaction does not go through. | | | | | * Question 3 1 out of 1 points | | | Economic profits are: Answer | | | | | Selected Answer: | b. [Total Sales Revenue] - [Market Value of all the Resources Employed in the Production Process] | Correct Answer: | b. [Total Sales Revenue] - [Market Value of all the Resources Employed in the Production Process] | | | | | * Question 4 1 out of 1 points | | | Which of the following is an implicit cost to a firm that
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1) Discuss the owner-manager conflict within the firm. Provide two real world manifestations of the conflict. Owner-manager conflicts finds it basis on the self-interested behaviors of managers‚ owners and shareholders. Firm managers may have personal goals that conflict with the owner’s goals of maximizing shareholder wealth. Potential conflicts occur when managers seek to maximize their own utility at the expense of the firm’s shareholders. Conflict between owners and managers typically arise
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benefit everyone. Economic goods are goods of value that can be seen and touched. Economic services are intangible things (with value) that cannot been seen or touched. All Rights Reserved 2– 3 LAW OF DEMAND Law of demand states that the higher the price of a good‚ the lower is the quantity demanded for that good and the lower the price‚ the higher is the quantity demanded‚ ceteris paribus. P ↑ Qdd ↓ P ↓ Qdd ↑ NEGATIVE RELATIONSHIP All Rights Reserved 2– 4 DEMAND SCHEDULE
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(Prof. Alfred Marshall) We can define Nat ional Income as t he collective achievement of a nat ion. In t his way‚ t he Nat ional Income is t he aggregat e of t he individual incomes. (Prof. Gardner Ackley) Nat ional Income is t he basic concept of economic‚ which refers t o t he market value of t he goods and services produced during a part icular year. (Prof. Richard Lipsy) CONCEPTS OF NATIONAL INCOme ----1.GROSS DOMESTIC PRODUct Total value of output (goods and services) produced by the factors
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Curve. P = 170 - 20Q or equivalently‚ Q = 8.5 - .05P Write profit as = R - C Price ($ 000) 170 130 90 50 Quantity in Lots 0 2 4 6 8 THE FIRM’S OPTIMAL OUTPUT DECISION R‚ C The Firm determines Output where MR = MC. 2.3 C = 100 + 38Q 300 200 100 0 M = 0 R = 170Q - Q2 -100 0 2 3.3 4 6 8 Q MAXIMIZING PROFIT ALGEBRAIC SOLUTIONS 2.4 Start with Demand and Cost Information P = 170 - 20Q and C = 100 + 38Q Therefore
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transaction cost economics. Some organizations struggle whether or not to outsource the IT division. The company has two choices for any economic activity: going outside to market or perform the activities in-house. In any case‚ the cost of the activity is divided into production costs‚ and transaction costs. Production costs in the case of the in-house division‚ includes hardware and software‚ whereas the transaction cost‚ which are the activities related to implementing the economic activity includes
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input‚ labor‚ and firm output is zero when labor is zero. When the firm hires 6 workers it produces 90 units of output. Fixed cost of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information‚ what is the total cost of production when the firm hires 7 workers? a. $66 b. $76 c. $906 d. $946 3.) Suppose that for a particular firm the only variable input into the production process is labor and that output equals zero
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