MICROECONOMICS IN MODULES (LOOSELEAF)
4th Edition
ISBN: 9781464188411
Author: KRUGMAN
Publisher: MAC HIGHER
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Question
Chapter 9A, Problem 1P
To determine
To calculate:
The present value by considering the given situation
Concept Introduction:
Present value: The present value is the current worth of a future sum of money on a given interest rate
The present value is calculated by the following formula
- PV
= Cash flow at period 
=
=number of periods.
Expert Solution & Answer
Explanation of Solution
- The
net present value of plan (i) is calculated by the following - The present value of the (i) plan can be found out by the following
The present value of the (ii) is calculated by the following way
- =
= 
=
So plan (i) is considered to be less as compared to plan (ii)
- =
= 
The present value of the (ii) plan can be found out by the following
- =
= 
= 
So now the plan (ii) is less expensive
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ECON 2106: Microeconomics I Fall - 2023 Algoma University Homework # 2 (Due: October 19, 2023)
1. The market demand for cashmere socks is given by Q = 1,000 + 0.5I – 400P + 200P’ Where, Q = Annual demand in number of pairs I = Average income I dollars per year P = Price of one pair of cashmere shocks P’ = Price of one pair of wool shocks Given that I = $20,000, P = $10, and P’ = $5, determine ƐQP, ƐQI, and ƐQP’.
Chapter 9A Solutions
MICROECONOMICS IN MODULES (LOOSELEAF)
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