Answer:
What would happen is Price of TVs goes up and price of rental DVDs goes down. Subsequently, price of movies theaters rises.
Explanation:
As there are less import of Plasma TV from Japan, the supply will be lower, while demand remains unchanged. So, price of Plasma TV will go up following is the demand for plasma TV will go down
As Plasma TV and rental DVDs are complementary goods, downward in demand for plasma TV means less demand for rental DVDs while supplies for rental DVD remains the same. Thus, price of rental DVD will go down.
As rental DVD and movies theaters are substitute goods, the demand in rental DVD going down will cause the increase in the demand in movie theaters while supplies for movie theaters stay the same. So, movie theater ticket will go up subsequently.
Answer:
a. The socially efficient levels of abatement for UNC power plant is 10.
Explanation:
Note: See the attached Microsoft word file for the calculations of the anwers above.
Answer: No. She turns away business when the cost of an additional unit exceeds the income from it.
Explanation:
In order to maximize production, the optimal point at which Hester should wash cars is the point where marginal revenue equals marginal cost. Marginal cost should not be above marginal revenue because it would mean that a marginal loss is being made.
At the 101st car, Hester would make a marginal loss of $0.05 because the cost of $10.05 to wash exceeds the revenue of $10.00 that she charges the customer. She should therefore not accept this or additional business because it will lead to her incurring losses.
Answer:
The firm should pay $46907.57 for the given project.
Explanation:
Given information:
Return = $15000 annually
Time = 5 years
Opportunity cost = 18%
The formula for payment is
where, R is return, OC is opportunity cost, t is time in years.
Substitute R=15000, t=5 and OC=0.18 in the above formula.
Therefore the firm should pay $46907.57 for the given project.
Answer:
After tax cost of debt is 7.69%
Explanation:
The after tax cost of debt can be computed by first of all determining the pre-tax cost of debt .
The pre-tax of debt is the yield to maturity computed using the rate formula in excel as follows:
=rate(nper,pmt.-pv,fv)
nper is the number of times the bond would pay coupon interest over the entire bond life ,which is 15 years multiplied by 2=30
pmt is the semi-annual interest which is $1000*8.9%/2=$44.5
pv is the current price of the bond at $962
fv is the face value of the bond at $1000
=rate(30,44.5,-962,1000)=4.69%
this is the semi-annul yield ,annual yield is 9.38%
The 9.38% is the pretax
after tax cost of debt=9.38%*(1-0.18)=7.69%
0.18 is the 18% tax rate
