To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

Question

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Answer 1

Question

Chapter 3, Problem 1TY

To determine

To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

Expert Solution & Answer

Explanation of Solution

The interest which the tenant is getting from the bank is:

i=$200,000×4100=$8,000

The annual rent paid by the tenant is $ 24000.

The adjusted rent ($24000 - $8000) = $16000.

Here, buying the house will be a good deal because he is paying more rent as compared to the interest which he is receiving from the bank.

Here, the opportunity cost of buying the house is forgoing the interests on the deposits which is equal to $8000.

Economics Concept Introduction

Opportunity Cost:

The opportunity cost of a commodity is the amount of the next best alternative that is foregone in order to pursue one course of action. It is the expense of different items which has been surrendered.

For instance, delivering 1 unit of the bike reduces the production of 15 cycles as labor is used in the production of bike. Here, for this situation, the opportunity cost of delivering 1 bike is 15 cycles.

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Students have asked these similar questions

3. Consider the market for paper. The process of producing paper creates pollution. Assume that the marginal damage function for pollution is given by: MDF = 3E where damages are measured in dollars and E is the level of emissions. Assume further that the function describing the marginal abatement cost of emissions is given by MAC 120-E where benefits are measured in dollars and E is the level of emissions. a. Graph the marginal damage function (MDF) and the marginal abatement cost function (MAC). b. What is the unregulated level of emissions Eu? What is the social welfare of this emissions level? c. Assume an existing emission quota limits emissions to E = 60. Show on the graph why this policy is inefficient. What is the deadweight loss caused by this policy?

show written calculation for B

Problem 1: 1. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 5%? 2. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 8%? 3. If a stock is expected to pay an annual dividend of $20 this year, what is the approximate present value of the stock, given that the discount rate is 8% and dividends are expected to grow at a rate of 2% per year?

Answer 2

Question

Chapter 3, Problem 1TY

To determine

To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

Expert Solution & Answer

Explanation of Solution

The interest which the tenant is getting from the bank is:

i=$200,000×4100=$8,000

The annual rent paid by the tenant is $ 24000.

The adjusted rent ($24000 - $8000) = $16000.

Here, buying the house will be a good deal because he is paying more rent as compared to the interest which he is receiving from the bank.

Here, the opportunity cost of buying the house is forgoing the interests on the deposits which is equal to $8000.

Economics Concept Introduction

Opportunity Cost:

The opportunity cost of a commodity is the amount of the next best alternative that is foregone in order to pursue one course of action. It is the expense of different items which has been surrendered.

For instance, delivering 1 unit of the bike reduces the production of 15 cycles as labor is used in the production of bike. Here, for this situation, the opportunity cost of delivering 1 bike is 15 cycles.

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Answer 3

Question

Chapter 3, Problem 1TY

To determine

To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

Expert Solution & Answer

Explanation of Solution

The interest which the tenant is getting from the bank is:

i=$200,000×4100=$8,000

The annual rent paid by the tenant is $ 24000.

The adjusted rent ($24000 - $8000) = $16000.

Here, buying the house will be a good deal because he is paying more rent as compared to the interest which he is receiving from the bank.

Here, the opportunity cost of buying the house is forgoing the interests on the deposits which is equal to $8000.

Economics Concept Introduction

Opportunity Cost:

The opportunity cost of a commodity is the amount of the next best alternative that is foregone in order to pursue one course of action. It is the expense of different items which has been surrendered.

For instance, delivering 1 unit of the bike reduces the production of 15 cycles as labor is used in the production of bike. Here, for this situation, the opportunity cost of delivering 1 bike is 15 cycles.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 3, Problem 1TY

To determine

To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

Expert Solution & Answer

Explanation of Solution

The interest which the tenant is getting from the bank is:

i=$200,000×4100=$8,000

The annual rent paid by the tenant is $ 24000.

The adjusted rent ($24000 - $8000) = $16000.

Here, buying the house will be a good deal because he is paying more rent as compared to the interest which he is receiving from the bank.

Here, the opportunity cost of buying the house is forgoing the interests on the deposits which is equal to $8000.

Economics Concept Introduction

Opportunity Cost:

The opportunity cost of a commodity is the amount of the next best alternative that is foregone in order to pursue one course of action. It is the expense of different items which has been surrendered.

For instance, delivering 1 unit of the bike reduces the production of 15 cycles as labor is used in the production of bike. Here, for this situation, the opportunity cost of delivering 1 bike is 15 cycles.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 3, Problem 1TY

To determine

To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

Expert Solution & Answer

Explanation of Solution

The interest which the tenant is getting from the bank is:

i=$200,000×4100=$8,000

The annual rent paid by the tenant is $ 24000.

The adjusted rent ($24000 - $8000) = $16000.

Here, buying the house will be a good deal because he is paying more rent as compared to the interest which he is receiving from the bank.

Here, the opportunity cost of buying the house is forgoing the interests on the deposits which is equal to $8000.

Economics Concept Introduction

Opportunity Cost:

The opportunity cost of a commodity is the amount of the next best alternative that is foregone in order to pursue one course of action. It is the expense of different items which has been surrendered.

For instance, delivering 1 unit of the bike reduces the production of 15 cycles as labor is used in the production of bike. Here, for this situation, the opportunity cost of delivering 1 bike is 15 cycles.

Answer 6

Chapter 3, Problem 1TY

To determine

To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

Expert Solution & Answer

Explanation of Solution

The interest which the tenant is getting from the bank is:

i=$200,000×4100=$8,000

The annual rent paid by the tenant is $ 24000.

The adjusted rent ($24000 - $8000) = $16000.

Here, buying the house will be a good deal because he is paying more rent as compared to the interest which he is receiving from the bank.

Here, the opportunity cost of buying the house is forgoing the interests on the deposits which is equal to $8000.

Economics Concept Introduction

Opportunity Cost:

The opportunity cost of a commodity is the amount of the next best alternative that is foregone in order to pursue one course of action. It is the expense of different items which has been surrendered.

For instance, delivering 1 unit of the bike reduces the production of 15 cycles as labor is used in the production of bike. Here, for this situation, the opportunity cost of delivering 1 bike is 15 cycles.

Answer 7

Chapter 3, Problem 1TY

To determine

To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

Answer 8

Expert Solution & Answer

Explanation of Solution

The interest which the tenant is getting from the bank is:

i=$200,000×4100=$8,000

The annual rent paid by the tenant is $ 24000.

The adjusted rent ($24000 - $8000) = $16000.

Here, buying the house will be a good deal because he is paying more rent as compared to the interest which he is receiving from the bank.

Here, the opportunity cost of buying the house is forgoing the interests on the deposits which is equal to $8000.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Opportunity Cost:

The opportunity cost of a commodity is the amount of the next best alternative that is foregone in order to pursue one course of action. It is the expense of different items which has been surrendered.

For instance, delivering 1 unit of the bike reduces the production of 15 cycles as labor is used in the production of bike. Here, for this situation, the opportunity cost of delivering 1 bike is 15 cycles.

Answer 12

Ch. 3 - Prob. 1TY Ch. 3 - Prob. 2TY Ch. 3 - Prob. 3TY Ch. 3 - Prob. 4TY Ch. 3 - Prob. 1DQ Ch. 3 - Prob. 2DQ Ch. 3 - Prob. 3DQ Ch. 3 - Prob. 4DQ Ch. 3 - Prob. 5DQ

To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

To examine: whether the tenant should buy the house or rent it. Concept of opportunity cost is to be explained in this context.

Explanation of Solution

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Chapter 3 Solutions