Q7 The profit maximizing rule states that:Firms maximize profits by producing at the quantity where average revenueexceeds average cost.Firms maximize profits by producing at the quantity where marginal revenueequals marginal cost.Firms maximize profits by producing at the quantity where average revenueequals average cost.Firms maximize profits by producing at the quantity where total revenue equalstotal cost.Firms maximize profits by increasing prices.

Answer: option b (Firms maximize profits by producing at the quantity where marginal revenue equals…

Answered: The profit maximizing rule states that:…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4) You are a financial professional working in a corporate loan department. A company named Mitch Hedberg Inc. (MH) comes to you for a loan. MH has debt from a previous loan (given by a different firm than yours) of 200. Your company analysts say that MH is likely to earn either 180, 240, or 300 this year - each with a probability of 1/3. MH wants you to lend them 100. MH could use this borrowed 100 to do either project X or project Y. Project X has a guaranteed return of 125 if the 100 is put there. Project Y may return either 0 or 210; each has probability of 1/2 and also costs 100 to do. a) Which project, X or Y, has the larger expected value? b) If you lend MH the 100, what will they do with the money? Why? Show your math. c) Should you lend MH the money or not? Show your math. d) Why did I choose the letters "MH" for this problem? What financial economic concept with initials "MH" is important in this problem?
BN10.2 Case: Jennifer is willing to Pay $300 to Insure against the Theft of a $8,000 Necklace. The Probability of Theft is 4%. Question: What is Jennifer's Risk Tolerance?
Anh, Caitlin and Don are housemates saving up to buy a new treadmill for their home gym. Although the treadmill can only be used by one person at a time, the housemates never exercise together, and each person has ample opportunity to use the treadmill at a time of their convenience. The treadmill they are looking at costs $900 and they have agreed to purchase it. However, as part of their treadmill purchase, they have the option of buying additional gym accessories to complement the treadmill (e.g. weights, skipping ropes, etc.) valued at 167 dollars. If Anh values the additional accessories at 64 dollars and Caitlin values them at 42 dollars, how much must Don value them if the extra accessories are to be purchased? Answer to the nearest whole dollar figure (with no decimal points, spaces, S signs, or commas in your answer). QUESTION 5 Assume Country A is planning to build a virtual public library that will give all its citizens free access to books and journals. The project is…
2. Christiaan can go hiking, or he can stay at home. Hiking would be fun if nothing bad happens, but there is a risk if he goes hiking that he will meet a bear (not fun) or get bitten by a snake (very not fun). Christiaan decides that if there is a 5% chance of meeting a bear and a 1% chance of getting bitten by a snake, he would prefer to go hiking rather than stay at home. However, if the chance of meeting a bear is 10% and the chance of a snake bite is 5%, he definitely would rather stay at home. then (a) Consider the utility function: U (stay home) = 25, U (hike no event) = 100, U (hike & snake) -1000, U (hike & bear) = -200. Does this utility function represent Christiaan's pref- erences? Explain. (b) Suppose that the utility function in (a) does represent Christiaan's preferences. Would Christiaan prefer to hike or stay home if the probability of meeting a bear is 6% and the probability of being bitten by a snake is 4%? Show your work.
A couples house is $192,00 and their auto is $9,500. Assume that their home is now appraised at $200,000 and the value of their automobile has dropped to $8,700. Calculate and characterize the effects of these changes on their net worth.
[3%] 4. Consider the two-player game shown in the table below. Player 1 chooses between four possible strategies: A, B, C and D. Player 2 can choose among three possible strategies: a, b and c. In each cell of the table, the first number is the payoff for Player 1, the second number is the payoff for Player 2. Higher numbers represent higher payoffs. Player 2 a b C A 2,-2 4,0 -6,-2 B Player 1 4,-4 3,-3 9, 1 C 2,6 -1,4 6,4 D 6,2 0,4 -9,0 (a) Simplify the game as far as possible using the iterated deletion of strictly dominated strategies. Clearly explain the steps of your reasoning. [2%] (b) Identify any pure strategy Nash equilibria of the simplified game derived in part (a). [1%] (c) Identify any mixed strategy Nash equilibria of the simplified game derived in part (a). Write down the best response function for each player. Draw these functions Page 3 of 5
Three players (player 1, player 2 and player 3) each chooses a positive integer QE {1, 2, 3, . 100}. If all three players choose the same integer Q, each player gets $100/3. If all three players choose different integers, the player with the largest integer gets $100, and the two other players get $0. If two players choose the same integer Q, and the third player chooses a different integer Q', then the player playing Q' gets $0, and the two players who played Q get $50 each. Find 2 Nash equilibriums in this game. ....
What is the expected return from an investment if there is a 20 percent chance of a 4 percent return, a 40 percent chance of a 8 percent return, and a 40 percent chance of a 12 percent return
Fatima has a credit card account with Bank Muscat (BM). The bank is considering whether to raise Fatima’s credit card interest rate. She can respond by moving to National Bank of Oman (NBO) or do nothing. If BM raises Fatima’s interest rate and she does nothing, then BM increases profit by 150 OMR while Fatima receives -150 OMR. If BM raises Fatima’s interest rate and Fatima transfers her account to NBO, then BM receives -100 and she receives 75 OMR. If BM does nothing and she does nothing, then both gets 0 OMR. If BM does nothing and Fatima transfer her account to NBO then BM receives -100 while Fatima receives -40 OMR 1)Draw the game with the help of a tree chart.

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