The marginal valuation of the good, establish the consumer surplus and derive the demand curve. Concept Introduction: Consumer Surplus – The excess of consumers’ willingness to pay over what they actually pay (the ability to pay) for a good or service relative to the market price is the economic measure of consumer benefit known as the consumer surplus. Law of demand – The law states that as the price of a commodity falls its quantity demanded increases and vice versa, assuming all other variables to be constant. Linear Demand Equation – It expresses the quantity demanded as a function of price in the form, Qd= b + mp where b is the intercept and the slope m is constant. In other words, change in Qd with a one unit change in price is constant for a linear demand function. Law of Diminishing Marginal Utility – The law states that we consume more and more of a commodity, keeping the consumption of all other variables constant, the utility derived from the consumption of every additional unit diminishes. The marginal utility thus diminishes.

Question

QUESTION 4 (continued) while of machine B is N300, 000 only. Recommend which of the machines should be purchased. Assume 10% interest. (13mks) QUESTION 5 (25 marks) a) Why do Engineers have to monitor of depreciation of equipment/machines? (5mks) b) Enumerate the options available evaluating depreciation of equipment/machines and explain in detail anyone of them. (10mks) c) The cost of a machine N1,600,000 ant its salvage (scrap) value is N400,000. Determine the depreciation charges for each, if the estimated life of the machine is 4 years. (10mks) QUESTION 6 (25 marks) (6mks) (ii) Inventory Costs (iii) Sunk Cost (8mks) a) What are the types of equipment replacement decisions a company may face? b) Define the following terms: (i) Quality Costs (iv) Technological Obsolesce , c) A power holding company purchased new coal extraction equipment 3 years ago for N600,000. Management has discovered it is technologically outdated now. A new equipment alternative) has been identified. If a…

Answer 1

Question

Chapter 6, Problem 3.7P

To determine

The marginal valuation of the good, establish the consumer surplus and derive the demand curve.

Concept Introduction:

Consumer Surplus – The excess of consumers’ willingness to pay over what they actually pay (the ability to pay) for a good or service relative to the market price is the economic measure of consumer benefit known as the consumer surplus.

Law of demand – The law states that as the price of a commodity falls its quantity demanded increases and vice versa, assuming all other variables to be constant.

Linear Demand Equation – It expresses the quantity demanded as a function of price in the form, Qd= b + mp where b is the intercept and the slope m is constant. In other words, change in Qd with a one unit change in price is constant for a linear demand function.

Law of Diminishing Marginal Utility – The law states that we consume more and more of a commodity, keeping the consumption of all other variables constant, the utility derived from the consumption of every additional unit diminishes. The marginal utility thus diminishes.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

QUESTION 4 (continued) while of machine B is N300, 000 only. Recommend which of the machines should be purchased. Assume 10% interest. (13mks) QUESTION 5 (25 marks) a) Why do Engineers have to monitor of depreciation of equipment/machines? (5mks) b) Enumerate the options available evaluating depreciation of equipment/machines and explain in detail anyone of them. (10mks) c) The cost of a machine N1,600,000 ant its salvage (scrap) value is N400,000. Determine the depreciation charges for each, if the estimated life of the machine is 4 years. (10mks) QUESTION 6 (25 marks) (6mks) (ii) Inventory Costs (iii) Sunk Cost (8mks) a) What are the types of equipment replacement decisions a company may face? b) Define the following terms: (i) Quality Costs (iv) Technological Obsolesce , c) A power holding company purchased new coal extraction equipment 3 years ago for N600,000. Management has discovered it is technologically outdated now. A new equipment alternative) has been identified. If a…

Find the answers to questions

Question:When compared to insurance from an employer, the direct purchase of insurance is often: Options: Very cheap, because insurance from an employer helps control for adverse selection. Very expensive, because insurance from an employer helps control for adverse selection. Very cheap, because the direct purchase of insurance helps control for adverse selection. Very expensive, because the direct purchase of insurance helps control for adverse selection.