ALG (number labor hrs produce glue) =… Show more ALS ( labor hrs per unit to produce sausage) = 1 hr per pound ALG (number labor hrs produce glue) = 3 hrs per gallon Ps = price per pound of sausage Pg (price gallon of glue) = 12 Find hourly wage rate of Home’s economy. • Show less
1. Suppose there are two types of shirts available to Carl: red shirts and black shirts Carl is alwa
What is the isocost line for a budget of $16 million? What is t… Show more we have q = F(K;L) = (2/100)K 0.5 L 0.5 What is the isocost line for a budget of $16 million? What is the equation for the isoquant? Find the slope (the derivative) of this isoquant and this isocost line.2 What condition has to hold so that you minimize costs? The minimized cost as a function of output q is C(q) = 2000q (where Cost is in thousands of $), so how many movies can you a ord to produce at the afore-mentioned budget? What is the additional cost of an additional movie now? How much does it cost on average to produce a movie? Comparing these costs to the situation when you have 100 units of capital as in question 2, then is your average cost higher or lower [assuming you want to produce 8 movies]? What about the marginal cost? Briefly state why. Imagine that you come in as a new manager and discover that the current capital-labor ratio is K=L = 1. If you spend 100 additional (marginal) dollars on hiring more labor, how many additional (marginal) units of labor can you hire and how much more output can you produce? Answer the same for capital. If you have to stay on the same budget, would you hire or re workers? • Show less
If you can’t see the graph for #5, just skip. For whatever reason I’m having a bit of an issue with… Show more If you can’t see the graph for #5, just skip. For whatever reason I’m having a bit of an issue with those! 🙁 QUESTION 1 Your credit card charges a 21% nominal annual interest rate on unpaid balances. If interest is compounded continuously, the effective annual interest rate = a. 1.75% b. 21.0% c. 23.1% d. 23.4% QUESTION 2 You plan to spend $300 for gasoline in February, $350 in March, and $400 in April. If this is January, the present worth of your planned gasoline purchases can be found by which formula if the interest rate = ½% per month? a. P = 50(P/G,½%,3) b. P = 300(P/G,½%,3)(50(A/G,½%,3) c. P = 300(P/A,½%,3) + 50(P/G,½%,3) d. P = 300(P/G,½%,3) QUESTION 3 You plan to spend $300 for gasoline in February, $350 in March, and $400 in April. If this is January, the present worth of your planned gasoline purchases can also be found by which formula if the interest rate = ½% per month? a. P = 1050(1.005) 3 b. P = 300 + 350(1.005) + 400(1.005) 2 c. P = 300(1.005) + 350(1.005) 2 + 400(1.005) 3 d. P = 300(1.005) -1 + 350(1.005) -2 + 400(1.005) -3 QUESTION 4 Your credit card charges a 21% nominal annual interest rate on unpaid balances. If interest is compounded daily, the effective annual interest rate = a. 1.75% b. 21.0% c. 23.1% d. 23.4% 1 points QUESTION 5 Based on this cash flow diagram, what is a correct specification? (added to bottom maybe?) a. X = 20(P/A,6%,4)(P/F,6%,4) + 20(P/G,5%,4) b. X = 20(P/A,4%,6) + 20(P/G,4%,4) c. X = 20(P/A,6%,4) + 20(P/G,6%,4) d. X = 20(P/G,6%,4) QUESTION 6 You plan to spend $300 for gasoline in February, $350 in March, and $400 in April. If this is January and monthly interest is 1/2%, the present worth of your planned gasoline purchases = a. $742 b. $758 c. $1039 d. $1050 QUESTION 7 You save $3000 in Year 1, $2500 in Year 2, and $2000 in Year 3. If i = 10%, which specification is NOT correct for calculating the future worth of this saving at the end of Year 3? a. F = 3000(F/A,10%,3) – 500(P/G,10%,3)(F/P,10%,3) b. F = 3000(F/A,10%,3) – 500(P/G,10%,3) c. F = 3000(F/A,10%,3) – 500(A/G,10%,3)(F/A,10%,3) d. F = 3000(F/P,10%,2) + 2500(F/P,10%,1) + 2000 QUESTION 8 You borrow $8000 at an nominal interest rate of 6%. If you repay this loan quarterly, making 4 payments per year, the effective annual rate = a. 1.5% b. 6.0% c. 6.14% d. 6.86% QUESTION 9 Which of the following is correct? a. Geometric gradients change by a constant percentage over time b. Geometric gradients change by a constant amount over time c. Geometric gradients change by a factor of (i-g) over time d. Geometric gradients are the inverse of arithmetic gradients QUESTION 10 Your credit card charges a 21% nominal annual interest rate on unpaid balances. If interest is compounded monthly, the effective annual interest rate = a. 1.75% b. 21.0% c. 23.1% d. 23.4% QUESTION 11 You plan to spend $300 for gasoline in February, $350 in March, and $400 in April. a. G = 50 b. G = 300 c. G = 400 d. G = 1050 QUESTION 12 You expect to save $3000 in Year 1, $2500 in Year 2, and $2000 in Year 3. If i = 10%, the future worth of your savings at the end of Year 3 = a. $7500 b. $7940 c. $8084 d. $8380 Maybe the graph to #5 below? • Show less
Assume that you have two ways to get the money, one way is to have it at present, so PV=10,000, anot… Show more Assume that you have two ways to get the money, one way is to have it at present, so PV=10,000, another way is to get it in the future, so FV=11,000. Which one would you like to choose ? Why? And N=2 years, i=3% • Show less
Iggy only consumes two goods: coffee and cigarettes. Three cigarettes can be traded for one cup of c… Show more Iggy only consumes two goods: coffee and cigarettes. Three cigarettes can be traded for one cup of coffee in a free market, or one cup coffee can be traded for three cigarettes. Iggy initially has 12 cigarettes and 5 cups of coffees. 1. Find an equation that gives every bundle of cigarettes and coffee that Iggy could trade for. 2. Iggy has a MRS = -5 when he is holding his initial bundles (cigs, coffee)=(12,5). Given the rate of exchange, would Iggy trade cigarettes for coffee, or coffee for cigarettes? • Show less
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6%. You hold the bond f… Show more Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 6%. You hold the bond for five years before selling it. a. If the bond’s yield to maturity is 6% when you sell it, what is the internal rate of return of your investment? b.If the bond’s yield to maturity is 7% when you sell it, what is the internal rate of return of your investment? c.If the bond’s yield to maturity is 5% when you sell it, what is the internal rate of return of your investment. d. Even if a bond has no chance of default, is your investment risk free if you plan to sell it before it matures? Explain. • Show less
