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Assume a company expects that a $20 million expenditure on R&D will result in a new product that will rise its revenue by a total of $30 million 1 year from now. The firm estimates that the production cost of the new product will be $29 million.
a. What is the expected rate of return on this R&D expenditure?b. Suppose the firm can get a bank loan at 6 percent interest to finance its $20 million R&D project. Will the firm undertake the project? Explain why or why not.c. Now suppose the interest-rate cost of borrowing, in effect, falls to 4 percent because the firm decides to use its own retained earnings to finance the R&D. Will this lower interest rate change the firm's R&D decision? Explain.
An ice cream shop read in the local paper in which the elasticity of market demand for ice cream
Assume that the soft coal industry is a competitive industry and it is in long run equilibrium. Now assume that the firms in the industry form a cartel.
Assume you currently earn taxable income of $100,000 per year. You are subject to an MTR of 50%. Currently, your ATR is 35%. Calculate your annual tax.
Explain how can rational thinking the above behaviors. How do your thoughts impact, if at all, your opinion of the theory.
You should suppose that the accident at Chernobyl had no effect on the price of hot dogs or Jane's preference of caviar.
Illustrate what conditions is it possible to increase production of one good without decreasing production of another
Illustrate what is the estimated size of the union salary advantage. How might this advantage diminish the efficiency with which labor resources are allocated.
Recently submerged kingdom of Atlantis is populated through identical rational air breathing individuals. The king has decided to give an award to the industry whose product yields kingdom most economic value.
Elucidate how the price level will be affected by these expenditures in the short-run. Explain how GDP is affected in the long-run.
In a short run situation in which quantity demanded equals quantity supplied in a competitive industry, with price greater than the average cost of the typical firm,
rate of technological change also innovation has increased substantially. Discuss how these changes are likely to affect your firm's optimal bundling of tasks into jobs and subunits.
The agricultural market for corn usually can be characterized as a purely competitive industry. How might the following events affect the shot-run cost curves and output for a firm in the industry?
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