Managerial Economics (MindTap Course List)
4th Edition
ISBN: 9781305259331
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 2, Problem 1MC
An individual’s value for a good or service is
- a. the amount of money he or she used to pay for a good.
- b. the amount of money he or she is willing to pay for it.
- c. the amount of money he or she has to spend on goods.
- d. None of the above.
Expert Solution & Answer
To determine
The value of a good or service.
Explanation of Solution
The value of money is determined in terms of the amount that an individual is willing to pay for a good and service. Thus, the term ‘value’ indicates the willingness to buy by an individual and pay for those goods and services. Thus, option ‘b’ is correct.
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(1)
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(2)
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the depreciation rate.
(a) Using equations (1) and (2) find an expression for K*, the optimal amount of
capital the firm should use.
[3 marks]
(b) Referring to your result from part (a), comment on what happens to K* when
each of the following variables change (holding other variables constant),
(i)
The measure of technology (A) falls
(ii)
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(iii)
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[2 marks]
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[Hint: For each of parts (i)-(iii) you are being asked to comment on what happens to
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Chapter 2 Solutions
Managerial Economics (MindTap Course List)
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