Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Chapter 17, Problem 17.7P
To determine
To find:Current
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Bob lives in Toronto and runs a business that sells guitars. In an average year, he receives $701,000 from selling guitars. Of this sales revenue, he must pay the manufacturer a wholesale cost of $420,000; he also pays wages and utility bills totalling $247,000. He owns his show room; if he chooses to rent it out, he will receive $9,000 in rent per year. Assume that the value of this show room does not depreciate over the year. Also, if Bob does not operate this guitar business, he can work as a financial advisor, receive an annual salary of $32,000 with no additional monetary costs, and rent out his show room at the $9,000 per year rate. No other costs are incurred in running this guitar business.
write a Microeconomic Analysis Report based on this questions using appropriate foundational microeconomics theories and techniques; what is the impact of Covid- 19 on real estate final prices? what is the impact of Covid- 19 on real estate input prices? what is the impact of Covid- 19 on real estate completion rates?
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Consider a person who will live for two years (1 and 2). The real interest rate between the two periods is r. In period 1 any income
they have to use, Y1, must be earned by working at wage w, denoted in period 1 dollars, for hours H1, which they can choose. In
period 2 they cannot work, but they will be paid a stipend of Y2. Their intertemporal utility is defined over consumption of a
composite in each period, q1 and q2, and leisure in each period, L1 and L2. You can assume that the price of consumption in each
period is $1, denoted in that period's dollars. Given this information, state the person's utility maximization problem in full, and
derive the first order conditions for an optimal solution. Give an economic interpretation of the conditions you derive (i.e., carefully
describe the nature of the optimal choice).
Chapter 17 Solutions
Microeconomic Theory
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