ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 1.3P
To determine
The investment at varying expected
Concept Introduction:
Expected Return- The expected value of the potential outcomes or the expected profit or loss with associated known expected rates of return is the Expected Return from an investment
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
11. (Marginal Analysis) The owner of a small pizzeria is decid-
ing whether to increase the radius of its delivery area by
one mile. What considerations must be taken into account
if such a decision is to contribute to profitability?
7. (10 points) Joe has moved to a small town with only one golf course. His demand curve is P =
120-2Q where Q is the number of rounds of golf he plays per year. The manager of the golf
course offers Joe a special deal, where Joe pays an annual membership fee and can play as many
rounds of golf as he wants to at $20 per round. The golf course's Marginal Cost is $20.
P
$120
$20
demand curve is P = 120-2Q
MC-AC
Q*
(a) How many rounds of golf will Joe play per year (calculate the value of Q*)? Please explain.
(b) If the golf course wishes to implement a two-part pricing model, what membership fee will
maximize revenue for the golf course? Please show your calculations.
(c) Would someone who just occasionally plays golf (perhaps 1 or 2 rounds once every 2
months) prefer two-part pricing as given above, or would they prefer to pay a price of $100 per
round without any membership fee? Please explain.
8. (10 points) Assume that you live on the second floor of an apartment building and one day…
(d) Suppose the demand function is p = 20 = x. At what price or output is the revenue maximum? What is the
magnitude of the maximum revenue? Graph the revenue function and the marginal revenue function. Suppose that MC
= 0; what is the profit - maximizing price and output? IMPORTANT NOTE: PLEASE DRAW THE REVENUE FUNCTION
AND THE MARGINAL REVENUE FUNCTION IN A CHART. *** not an illustrating explaing how the chart will look like. I
want the actual chart drawn. please.
Knowledge Booster
Similar questions
- 14) Stan bought a car three years ago for $20,000. Recently he got a promotion and is deciding whether to keep his old car or to buy a new one. His dealer told him that the current market price of his old car is $15,000, The car maintenance costs are $1,000 now, and they are going to increase each year by at least $500. Stan compares his old car with a new one that, he calculates, would have an equivalent annual cost of $4,100. What is Stan's optimal decision if his current interest rate is 7%?arrow_forward5. Complete the following table. Price () 8. 4 Output (units) TR () MR () 1 2 3 4 %3Darrow_forward6. All else being equal, how will the following events affect price and quantity in the Canadian real estate market? Use a diagram to explain each of your answers. (30%) (a) The government raises immigration targets, causing migrants to flood into the country. (b) Crime increases in Canada. (c) The government gets rid of many construction regulations, making building easier. (d) A recession hits the nation. (e) The Bank of Canada raises interest rates. (f) The Baby Boomers all die at around the same time.arrow_forward
- 4. Use the Table below: Nike and Reebok Sales. Reebok and Nike must decide whether to have a sale or not, based on the potential economic profits shown in the table. Table: Nike and Reebok Sales Reebok Sale No Sale Reebok: $5M Sale Nike Nike: $5M Reebok: $IM Nike: $30M No Sale Reebok: $30M Reebok: $20M Nike: SIM Nike: $20M a.{9} Is there a Nash equilibrium in this game? If there is what is it, and if not, why not? b. (8.5) If Nike and Reebok were to collude to maximize joint profits, what decision should each firm pursue?arrow_forward(Figure: Market Demand for Oranges) Consider the figure Market Demand for Oranges. The amount by which the total If the price of oranges is benefits of oranges to consumers exceed consumers' total expenditures on oranges is called B, this quantity is depicted by the area Price (per bushel) 0 producer surplus; BCD consumer surplus; OCDE consumer surplus; BCD net benefit; OBDE Market Demand Quantity (per period)arrow_forward7arrow_forward
- 7. (10 points) What is the difference in the impact of a cash gift of $20 on the budget line of a consumer, compared to the impact of a gift card of $20 for good X on the budget line of the consumer? Assume that both good X and good Y are normal goods. Please explain and show the difference on the graphs below. Y Cash gift of $20 Y Gift card of $20 for X X xarrow_forward(consumer surplus) The price of a fairly standard Boba tea is $6.00. I would be willing to pay $10 dollars for the first tea, S8 for the second, S7 for the third, S5 for the fourth, S3 for the fifth, S2 for the sixth, and nothing for any additional teas. How many teas would I buy?arrow_forward1. (question on photo) 2. How much income does the consumer have to spend on good x and y? 3. The partial derivative of Langrarian function with respect to good Y is one of the three first-order conditions that would have to hold in order for L to be maximized which could be written as?arrow_forward
- Give typing answer with explanation and conclusionarrow_forward14arrow_forward1. Refer to graph (multiple choice) A. Refer to Graph. If the current wage rate results in a budget constraint of AB1, the individual will choose a. 0D hours of work and AD hours of leisure. b. AC hours of work and 0C hours of leisure. c. AD hours of work and 0D hours of leisure. d. 0C hours of work and AC hours of leisure. B. Refer to Graph. If there is a movement from equilibrium C to Equilibrium D, which one is the most accurate conclusion: a. The labor supply is decreasing b. The labor supply is increasing c. The individual is spending less hours working and the labor supply is decreasing d. The individual is spending more hours working C. Refer to Graph. The slope of the budget constraint AB1 is given by a wage = W1. A movement from AB1 to AB2 is due to: a. An increase in non-income wealth b. An increase in wage c. A decrease in non-income wealth d. A decrease in wagearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning